Trump’s Tariff Threat Pits Canada Against Mexico

by · NY Times

Trump’s Tariff Threat Pits Canada Against Mexico

The president-elect’s opening salvo in trade and border talks with the United States’ neighbors is casting a harsh light on the North American alliance.

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President-elect Donald J. Trump with Prime Minister Justin Trudeau of Canada during a Group of 7 summit in Quebec in 2018.
Credit...Doug Mills/The New York Times

By Matina Stevis-Gridneff and Simon Romero

Matina Stevis-Gridneff is The Times’s Canada bureau chief, and Simon Romero reports on Mexico, Central America and the Caribbean.

If President-elect Donald J. Trump’s threat of hefty tariffs on Canada and Mexico was intended as a divide-and-conquer strategy, early signs show that it might be working.

After his missive on Monday, in which he said he planned to impose a 25 percent tariff on all imports from both of the United States’ neighbors, Ottawa and Mexico City followed starkly different approaches.

Mexico took a tough stance, threatening to retaliate with its own tariffs on U.S. goods. Canada, instead, emphasized that it was much closer aligned to the United States than Mexico.

The trade agreement between the three North American nations has been carefully maintained over the past three decades through a delicate balance between the United States and its two key allies.

As Mr. Trump prepares to take office, his willingness to tear that up to pressure the two countries on migration could open the door to the United States-Mexico-Canada agreement being replaced by separate bilateral deals with the United States.

Canada’s Line: Better Than Mexico

Even before Mr. Trump’s tariff statements, Canadian officials publicly and privately had been laying the ground work for a negotiating stance that was based on drawing contrasts between Canada and Mexico.

Canada has been pointing out in meetings with allies of Mr. Trump that it is doing much better than Mexico in three areas that matter to Mr. Trump: borders, China and jobs, according to two senior Canadian officials involved in those discussions, as well as a United States official familiar with them.

The three officials spoke on condition of anonymity to freely discuss the conversations and because they were not authorized to brief the news media.

On the border, the key motivation behind Mr. Trump’s tariff threat, Canadian officials have been telling Republicans such as Senator Lindsey Graham, Republican of South Carolina, that Canada has a firm grip on its border with the United States. A surge in undocumented migrants crossing into the United States over the summer was a blip, not a trend, the officials have said.

Prime Minister Justin Trudeau of Canada spoke to Mr. Trump on Monday evening, and relayed a plan to further fortify the border, according to another Canadian official who requested anonymity to discuss a private conversation.

On Tuesday, Mr. Trudeau and senior members of his cabinet called for calm and insisted that they would be able to work with Mr. Trump.

“Rather than panicking, we’re engaging in constructive ways to protect Canadian jobs like we have before,” Mr. Trudeau said in the House of Commons. “The idea of going to war with the United States isn’t what anyone wants.” He added, “There is work we can do together. That is the work we will do seriously, methodically. But without freaking out.”

The second area where Canadian officials claim to be better partners with the United States than Mexico is on trade with China.

Chrystia Freeland, Canada’s finance minister, has repeatedly brandished Canada’s imposition of 100 percent tariffs on Chinese electric vehicles this summer as evidence that Canada is in sync with Mr. Trump’s hawkish attitude toward China.

And the two senior Canadian officials said they had raised this contrast privately in conversation with Republicans, suggesting that Mexico was reluctant to sever economic ties with China.

“We are very aligned with this U.S. administration on the issue of China, which is a central issue for them,” Ms. Freeland said this month.

On jobs, the two senior Canadian officials have sought to emphasize that the United States and Canada are more comparable in terms of prosperity and wage levels than Mexico, suggesting that Canada isn’t stealing American jobs. Mr. Trump has accused Mexico of doing just that.

Mr. Trudeau has allowed the members of his government to pursue a “better than Mexico” approach while telling Mexico he does not intend to split their alliance, according to the Canadian officials.

But Mr. Trudeau and his Liberal Party are deeply unpopular in Canada and facing tremendous pressure from the Conservative Party leader, Pierre Poilievre, and from the premiers of Canada’s provinces, who have been much blunter in describing the country’s relationship with Mexico and the United States.

“I only care about Canada; I want to put our country first,” Mr. Poilievre said during a news conference in Ottawa on Tuesday.

“We trade more with the U.S. than we do with the rest of the world combined,” he added. “I will do what is necessary to preserve that relationship above all others.”

Still, Mr. Poilievre, whose party is widely expected to win Canada’s next national election, said he favored retaliation if Mr. Trump did impose tariffs.

Doug Ford, the premier of Ontario, which has close economic ties to the United States because of the auto industry, said on Tuesday, “To compare us to Mexico is the most insulting thing I’ve ever heard.”

Sheinbaum Strikes Back

In Mexico, President Claudia Sheinbaum has taken a different approach, centering the discussion about tariffs largely on the trade relationship between Mexico and the United States.

She has also downplayed statements from Canadian officials as political posturing, saying last week that Mr. Trudeau had personally reassured her that he did not agree with removing Mexico from the treaty.

Ms. Sheinbaum added on Tuesday morning that she was planning on sending a separate letter to Mr. Trudeau laying out how Mexico would proceed on the issues of tariffs and Chinese imports.

Still, she took a shot at Canada. During her daily news conference on Tuesday, Ms. Sheinbaum said that Canada’s imports of electric vehicles from China reached $1.6 billion in 2023, demonstrating what she described as “exponential growth.”

“In Mexico’s case, the figure is much lower,” she added.

Unlike Mr. Trudeau’s political weakness at home, which is casting doubt over his handling of the Trump transition, Ms. Sheinbaum, who was elected recently, has much stronger domestic backing in her approach.

Déjà vu

Some are questioning Canada’s strategy of casting scrutiny on Mexico after Mr. Trump placed Canada alongside Mexico in his threat to impose tariffs, drawing comparisons to the previous negotiation of the trade agreement among the three countries, which happened during Mr. Trump’s first presidency.

“They were trying to play Trump’s game, but the political bet they made didn’t pay off,” said Diego Marroquín Bitar, a scholar who specializes in North American trade at the Wilson Center, a Washington research group. “Now they’re in the same position as Mexico again.”

Mr. Marroquín Bitar compared Canada’s current stance with the reactions to Mr. Trump’s threats of imposing tariffs on both countries during his first administration.

At that time, he said, Mexican negotiators sought to keep Canadians closely informed of their own discussions with the first Trump administration. In the end, the three countries agreed jointly in 2020 to overhaul the trade deal that had governed commerce in North America for decades.

“It’s a little hypocritical that they are now trying to throw Mexico under the bus,” Mr. Marroquín Bitar said.

Trade dynamics in North America are also in flux in ways that could end up strengthening Mexico’s hand in any negotiations.

“A few years ago, Canada was, in many metrics, more important than Mexico, at least when it comes to trade,” Mr. Marroquín Bitar said.

But Mexico, he added, “is now the top supplier of imports to the U.S., its top export destination.”

“Mexico is the country that buys the most agricultural products from the U.S.,” he said, “more so than Canada, more so than China.”

Emiliano Rodríguez Mega contributed reporting from Saltillo, Mexico.

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