OTTAWA — A natural gas pipeline, a railway network and a business trip to a presidential palace are all signs of Canada and Mexico strengthening commercial ties amid the chaos created by the neighbourhood superpower.

Their political leaders, though, have some catching up to do.

The Canada-Mexico relationship has long been shaped and overshadowed by the United States, resulting in little direct trade between them. Canada sent $591.5 billion worth of goods to the U.S. last year, or 76 per cent of its total exports. Mexico, by comparison, received a little over one per cent of Canada’s total exports—about $9.4 billion worth of goods. In the other direction, Canada received $29.4 billion in goods from Mexico, which is less than four per cent of Canada’s total imports.

“Canada-Mexico trade is almost invisible for people, because it goes through this intermediate processing zone, which is the United States,” said Laura Dawson, executive director at the Future Borders Coalition. “It’s all part of a larger integrated package.”

That integration is now under attack. U.S. President Donald Trump launched his global trade war by slapping broad-based tariffs on Canadian and Mexican goods, which he linked to concerns about fentanyl. He has since expanded it to include, among other things, auto tariffs that Trump says are designed to lure carmakers to the U.S., upending a sector that for decades has relied on supply chains involving all three countries.

The future of the United States-Mexico-Canada Agreement (USMCA) is also in doubt. When Prime Minister Mark Carney visited the White House two weeks ago, Trump told reporters the result of the USMCA review due by July 2026 could be to “adjust it or terminate it.” Trump’s new envoy to Ottawa, Pete Hoekstra, hinted at another option: “Is it still USMCA? Is it USA-Canada?”

Canadian businesses are not waiting around to find out.

François Poirier, the CEO of Calgary-based TC Energy, has been calling for deeper, three-way integration of the North American energy sector. His argument is not purely philosophical. TC Energy expects its US$4.5-billion Southeast Gateway natural gas pipeline in southern Mexico, the first public-private partnership with state-owned electricity utility CFE, to begin operations by the end of this month. “We’re going to be patient. We see a lot of value in our business in Mexico,” Poirier said on a conference call with analysts on May 1. “North America is an intercontinental system and we’re the only gas transmission company that’s in all three countries.”

President Claudia Sheinbaum’s ambitious “Plan Mexico,” a six-year strategy to reduce reliance on the U.S. and Asia, aims to attract US$100 billion per year in foreign direct investment and boost energy production capacity by 16 per cent. “In their eyes, Southeast Gateway is the poster child that they want to show the world,” Poirier told the ARC Energy Ideas podcast. “Foreign investors can come to Mexico and succeed.” Canada accounted for about $46 billion of direct foreign investment in Mexico last year.

Others are cutting out the U.S. entirely. Canadian Pacific Kansas City, a freight railway network with about 32,000 kilometres of routes across all three countries, said it generated $100 million in new business transporting goods directly from Canada to Mexico and hopes to also do the reverse. “We‘ve become a land bridge across America,” CEO Keith Creel told The Globe and Mail. 

That bridge is not just for trains. In an interview with The Logic last month, Nathan Strang, a Los Angeles-based ocean freight director for supply-chain logistics company Flexport, pointed to one of the firm’s clients that has a distribution centre in Mexico. The company is now trucking goods it used to sell to the U.S. straight through to Canada, Strang said.

Trade experts point to several areas where Canada and Mexico could increase their shared commerce. Unlike the U.S., both are also members of the Trans-Pacific trade pact, which provides some stability for businesses even if the trilateral North American deal falls apart. 

Mexico’s growing middle class and its younger, larger population present opportunities for Canada in both imports and exports. Shauna Hemingway, a former Canadian diplomat in Mexico City, said both countries, like the U.S., are concerned about China’s production overcapacity flooding their markets. “Mexico would like to provide that manufacturing base and the skilled and lower-skilled labour force that companies have found in China,” said Hemingway, a senior special adviser to the Business Council of Canada. There is also some overlap between what Canada exports to China and what Mexico imports from China, she said, so one solution could be to cut China out of the equation and trade with each other instead.

There are political fences to mend first. Last fall, Sheinbaum publicly urged then-prime minister Justin Trudeau not to break ranks with Mexico. Ontario Premier Doug Ford and Alberta Premier Danielle Smith had encouraged Ottawa to pursue a bilateral trade deal with the U.S. over concerns Mexico was a “back door” for imports from China. Chrystia Freeland, who was federal finance minister at the time, described the concerns as legitimate and said she shared them.

“I think that was a political mistake that came at a really high cost for Canada,” said Diego Marroquín Bitar, an expert in U.S.-Mexico trade and relations at the Washington-based Wilson Center. “It aggravated its strongest ally when it comes to negotiations with the U.S.”

The last time the three countries negotiated a trade agreement, during Trump’s first term, Canada was nearly left behind. While talks between Ottawa and Washington were stalled in 2018, the U.S. rushed to secure a deal with Mexico before its then-president-elect Andrés Manuel López Obrador took office. Canada returned to the table after the others announced a preliminary agreement.

Sheinbaum remains optimistic about the future of USMCA. The day after Carney met Trump, she said the U.S. tariff carve-outs for goods traded through USMCA—as well as Trump’s desire to enforce compliance with its rules-of-origin criteria—are reasons to believe it will survive the review. About 50 per cent of Mexico’s exports to the U.S. went through USMCA last year, U.S. trade data shows, compared to 38 per cent for Canada.

The fact that Mexico is a greater source of U.S. concerns over migration, fentanyl and the spread of China’s economic influence means it also commands more attention in Washington, said Dawson, from the Future Borders Coalition. That gives it more power. “Canada doesn’t have that kind of ability to influence, control the flow, literally, of bad stuff coming into the United States,” Dawson said. “Canada needs to be at that table, otherwise the U.S. and Mexico are going to go off and do stuff that Canada might not be very happy with.” 

In January, Goldy Hyder, president and CEO of the Business Council of Canada, led a delegation of business leaders to Mexico City. He said they told Sheinbaum they wanted the trilateral agreement to remain. He has also urged Carney, who attended an event held by the council during his trip to Washington, D.C., to invite Sheinbaum to next month’s G7 summit in Kananaskis, Alta., and hold a North American Leaders’ Summit while there.

The Prime Minister’s Office has not responded to a request from The Logic about whether an invitation to Sheinbaum is in the works. Last Thursday, though, the two leaders spoke for the second time, and a PMO readout of the call suggested Sheinbaum will not have to persuade Carney to support Mexico being at the table for trade talks. “The leaders discussed building on the strong trade relationship between the two countries, grounded in the Canada-United States-Mexico Agreement, and the imperative to strengthen their respective economies against future shocks,” it said. They also asked their officials to keep in touch.

Hemingway, who joined Hyder at the meeting with Sheinbaum, said both countries are stronger when they work together—especially since they share close, if different, vantage points. “There are no two countries in the world that understand the United States better than Canada and Mexico.”