Canada looks increasingly willing to ditch Mexico to protect trade with the United States.
Driving the news: A growing number of Canadian political leaders have expressed a readiness — some more eager than others — to strike a trade deal with the U.S. that doesn’t include Mexico.
- Alberta Premier Danielle Smith said this weekend she was “1,000 percent” in favour of booting Mexico from the trilateral trade agreement that spans the continent. Ontario Premier Doug Ford floated a similar idea last week.
- Finance Minister Chrystia Freeland said she shared U.S. concerns about whether Mexico was “aligned” on trade policy but stopped short of saying they should be cut out of a new deal.
Why it’s happening: Like a friend forced to pick sides in a messy breakup, Canada expects to find itself caught in the crossfire of a fight between the incoming Trump White House and Mexico that could destroy NAFTA’s successor, the United States-Mexico-Canada Agreement.
Why it matters: The end of free trade with the United States would spell serious trouble for Canada’s economy, and the government’s top priority will be to avoid that outcome.
- Donald Trump’s promise to impose across-the-board 10% tariffs on imports to the U.S. would cost Canada almost 1% of its GDP, according to the Chamber of Commerce.
Bottom line: Exchanging a continent-wide trade agreement for a bilateral deal with the U.S. might not be Canada’s first choice, but don’t be surprised if negotiators accept it to secure an exemption from Trump’s tariffs.—TS