Political crisis in Canada, repercussions in Mexico

With Donald Trump just months away from occupying the White House, the best—and perhaps only—bet for both countries is to stand united. Together, Canada and Mexico account for more than a third of U.S. trade. North America has the potential to be the most important economic bloc globally, and giving up on it would not only be a wrong decision but also suicidal.

A few days ago, Canadian Prime Minister Justin Trudeau admitted that his government “made some mistakes” on immigration. In a video broadcast on social media, he outlined his administration's plans to reduce the number of immigrants arriving under its permanent residency program over the next three years. This statement not only reflects a significant shift in Canadian immigration policy but also highlights the growing pressure Trudeau faces in an increasingly adverse political context.

Since his resounding victory in 2015, when he won 184 seats and 39.5% of the popular vote, the prime minister has experienced a steady decline in popularity. Recent polls paint a bleak picture: only 23% of Canadians approve of his stewardship, while 72% believe he should resign. This plunge in his popularity is no accident.

The reason is simple: the economy. Inflation has hit Canadians hard, and 41% report that their financial situation worsened last year. The cost of housing has skyrocketed, and the basic food basket is getting more expensive. Political scandals and broken promises have eroded confidence in Trudeau. Meanwhile, the conservative opposition, led by Pierre Poilievre, is capitalizing on discontent, leading the Liberals by 17 points in the polls.

Against this backdrop, Trudeau has launched a series of measures that smack of electoral goals. One is the temporary suspension of VAT on essential products such as food and children's clothing (from December 14 to February 15, 2025). On immigration, he has made a U-turn. His government announced a drastic reduction in immigration targets: from 500,000 new permanent residents planned for 2025 to only 365,000 by 2027.

However, it is in the area of international trade that Trudeau showed his most dangerous move. His comments on Mexico's possible exclusion from the Mexico-United States-Mexico Free Trade Agreement (CUSMA) could become a ticking time bomb heading into the trade deal's renegotiation. Trudeau expressed concerns about Chinese investment in Mexico, suggesting that Canada could “pursue other options” if Mexico does not address these concerns. This position echoes that expressed by provincial leaders such as Doug Ford of Ontario and Danielle Smith of Alberta.

Ford has urged the negotiation of a bilateral agreement with the United States that leaves Mexico out, arguing that Mexico should not benefit from the treaty if it allows China to infiltrate its products into North America. Trudeau has attempted to navigate this complicated situation cautiously; while acknowledging legitimate concerns about Chinese investment in Mexico, he also emphasizes the importance of maintaining a strong trade relationship between the three countries.

On November 19, in the corridors of the G20, President Claudia Sheinbaum and Prime Minister Justin Trudeau staged an encounter that, at first glance, appeared reassuring. According to Sheinbaum, Trudeau assured her he was not contemplating excluding Mexico from the Trade Agreement. But let's not fool ourselves: diplomacy has many faces, and this is just one of them.

While Mexico seems confident in its relationship with Prime Minister Trudeau, it is crucial to remember that Canadian federalism is robust and that trade decisions are not solely up to the federal government. Alberta's oil and gas exports, British Columbia's agricultural products, including fruits and vegetables, as well as parts and vehicles assembled in Ontario, are some of the most valuable products Canada sends to the United States. Each province and territory has a stake in the upcoming negotiations and will be consulted on Canada's final strategy heading into the renegotiation in 2026.

Days earlier, at the APEC summit in Peru, which Mexico did not attend, courtesy of the disastrous foreign policy inherited from the Lopez Obrador government, Trudeau had already issued a veiled warning saying Mexico has been a "solid partner" but that Ottawa has concerns about the amount of Chinese investment in the country.

Mexico's absence from forums such as APEC is not just a diplomatic slip-up but a significant strategic error. While the Asia-Pacific region discussed the future of trade and geopolitics, Mexico was left without a voice or vote, vulnerable to the machinations of others, without the possibility of getting ahead of the curve to prevent the issue of Chinese investments in Mexico from being used as the perfect scapegoat to address Canadian domestic and electoral problems. This gamble is a dangerous move that could destabilize not only the CUSMA process but also the North American trade architecture.

But here's the irony: Mexico and Canada are making the same mistake. They are letting their domestic problems dictate their foreign policy, forgetting that the real challenge comes from Washington. With Donald Trump just months away from occupying the White House, the best - and perhaps only - bet for both countries is to stand together. Together, Canada and Mexico account for more than a third of U.S. trade. North America has the potential to be the most important economic bloc globally, and giving up on it is not only a wrong decision but it would also be suicidal.

Canada must understand that maintaining the alliance with Mexico is the best option. This is a long-term vision in a political and electoral world obsessed with the short term, but it is the only alternative that makes sense.

Mexico, for its part, needs to wake up from its diplomatic lethargy. CUSMA is not a gift but the result of decades of negotiations and compromises. If Sheinbaum's government does not act decisively and astutely, Mexico could find itself excluded from an agreement that is the pillar of its economy.

X: solange_