The premier of the Canadian province of Ontario would like to see the USMCA trade pact terminated unless Mexico matches U.S. and Canadian tariffs on Chinese imports.
Doug Ford, premier of Canada’s most populous province since 2018, took to the X social media platform on Tuesday to accuse Mexico of becoming a low-tariff “backdoor” into North America for Chinese products, and to advocate the negotiation of a bilateral Canada-United States free trade agreement “if Mexican won’t fight transshipment.”
“Free trade needs to be fair. Since signing on to the United States-Mexico-Canada Agreement, Mexico has allowed itself to become a backdoor for Chinese cars, auto parts and other products into Canadian and American markets,” Ford said.
The situation, he added, is “putting Canadian and American workers’ livelihoods at risk while undermining our communities and doing enormous harm to our shared economic success.”
“If Mexico won’t fight transshipment by, at the very least, matching Canadian and American tariffs on Chinese imports, they shouldn’t have a seat at the table or enjoy access to the largest economy in the world,” the premier wrote.
“Instead, we must prioritize the closest economic partnership on earth by directly negotiating a bilateral U.S.-Canada free trade agreement that puts U.S. and Canadian workers first.”
Ford’s comments came a week after the victory of Donald Trump in the presidential election in the United States, and ahead of the 2026 review of the USMCA, which superseded NAFTA in 2020.
Trump has also railed against Mexico forwarding Chinese products north, saying in an address at the Detroit Economic Club last month that he would seek “strong new protections against transshipment” in the USMCA “so that China and other countries cannot smuggle their products and auto parts into the United States tax-free through Mexico to the detriment of our workers and our supply chains.”
At a press conference on Tuesday, Ford once again made critical remarks about Mexico, saying that it is importing cheap products from China and consequently “undercutting our hardworking men and women, not only here but in the U.S.”
“… They’re slapping a ‘Made in Mexico’ sticker on and shipping it up,” he said.
“… What I’m proposing to the federal government [is] we do a bilateral trade deal with the U.S. and if Mexico wants a bilateral trade deal with Canada, God bless them,” Ford said.
Tariffs, trade and transshipment
Mexico implemented 5-50% tariffs on a wide range of Chinese products in April, but its duties on some goods, such as electric vehicles, are lower than those levied by the United States and Canada on imports from China.
In addition to imposing tariffs on goods from China and other countries with which it doesn’t have trade agreements, Mexico is actively seeking to reduce its reliance on imports from the East Asian economic powerhouse.
Finance Minister Rogelio Ramírez de la O said in late July that replacing just one-tenth of Chinese imports with products made in North America would significantly boost economic growth in both Mexico and the United States.
Earlier in July, Ramírez said that Mexico buys US $119 billion worth of products per year from China and sells just $11 billion worth of goods to China.
“China sells to us but doesn’t buy from us and that’s not reciprocal trade,” he said.
The value of Chinese products that are shipped to the United States and Canada via Mexico is not known, but the Financial Times reported in early 2024 that “some Chinese goods” that would have previously been shipped directly to the United States “are still making their way to the country via Mexico — without facing the same levies.”
Those goods, despite Ford’s claim, do not include Chinese-made vehicles, which could not be passed off as being made in Mexico even with the kind of “sticker” the Ontario premier referred to.
In an article headlined “China circumvents US tariffs by shipping more goods via Mexico,” the Financial Times also reported on data that showed that the number of 20ft containers shipped to Mexico from China increased 28% between the first three quarters of 2022 and the same period of 2023.
Earlier this year, the United States became particularly concerned about an increase in steel and aluminum exports from Mexico.
In a meeting in February with Mexico’s then economy minister Raquel Buenrostro, U.S. Trade Representative Katherine Tai “stressed the urgent need for Mexico to take immediate and meaningful steps to address the ongoing surge of Mexican steel and aluminum exports to the United States and the lack of transparency regarding Mexico’s steel and aluminum imports from third countries,” according to a statement from Tai’s office.
Mexico implemented tariffs on steel nails and balls from China the following month, while the tariffs that took effect in April hit Chinese steel and aluminum among a wide range of other product categories.
Furthermore, Mexico and the United States announced new measures in July to combat the circumvention of U.S. tariffs on steel and aluminum. They included the implementation of a North American “melted and poured” standard for steel and a similar requirement for aluminum in order for those products to qualify for tariff-free shipment to the United States.
The United States is also concerned about the possibility of Chinese companies making cars, including electric vehicles, in Mexico and exporting them to the U.S.
As things stand, no major Chinese automakers have plants in Mexico, although some, including EV giant BYD, have plans to establish a manufacturing presence here soon.
Could bilateral trade deals really supersede USMCA?
Yes, but it appears extremely unlikely that the three-way North America free trade pact will be terminated anytime soon.
While Trump has threatened to impose tariffs on Mexican exports to the United States, and declared last month that he would “have a lot of fun” renegotiating USMCA, he has not advocated the termination of the pact he negotiated and signed during his first term as president.
“I terminated NAFTA. That’s a pretty big thing. A lot of people said it would be impossible to do. I got it done, and we have a great deal now,” he said in Detroit.
“What we have to do is make it much better even, and we’ll be able to do that very shortly,” said Trump, who suggested in 2018 that NAFTA could be replaced with bilateral trade accords.
Premier Ford, of course, does not represent the government of Canada, although he said in a subsequent X post on Tuesday that he had spoken to Prime Minister Justin Trudeau about “upcoming USMCA renegotiations” and that they “agreed about the need to keep standing up for Canadian and Ontario workers.”
Trudeau himself said Tuesday that “just about all of our partner democracies around the world have expressed varying degrees of concern about Chinese overcapacity.”
Indicating that he wants the USMCA to continue, the prime minister added that Canada would “continue to work with partners like the United States, and hopefully Mexico as well, to make sure that we are united in our desire to protect good jobs.”
For its part, Mexico is certainly in favor of the continuation of the USMCA, under whose terms it became the world’s top exporter to the United States. President Claudia Sheinbaum has said on repeated occasions that the three North American trade partners complement each other rather than compete with each other economically. Indeed, the economies and supply chains of Mexico, the United States and Canada have become increasingly integrated during the three decades since NAFTA took effect in 1994.
In a report on Ford’s remarks, the Canadian Broadcasting Corporation said that “booting” Mexico from the USMCA “would be opposed by large companies with business in all three countries.”
“It also would be viewed skeptically by some who see Mexico as a political ally in preserving U.S. congressional backing for North American trade,” CBC said.
“The huge commercial flow across the Mexico-U.S. border, along with the enormous Mexican-American population, creates support for the pact among southern U.S. lawmakers with fewer connections to Canada.”
Still, Mexico’s growing trade relationship with China, as well as the influx of Chinese investment to Mexico, could be highly contentious issues at the USMCA review in 2026, especially if the United States and Canada continue to see their southern neighbor as a “back door” to the North American market.
The Sheinbaum administration, however, has demonstrated that it is firmly committed to North America and will not allow its trade and investment relationship with China to adversely affect its relationship with the United States – which imports around 80% of all Mexican exports – and Canada.
For example, Economy Minister Marcelo Ebrard said last month that Mexico would “mobilize all legitimate interests in favor of North America” amid the ongoing trade war between the United States and China. That war looks set to intensify when Trump returns to the White House in January, and the 47th U.S. president – in an extension of his “America first” ideology – could even ignite a tit-for-tat trade conflict with Mexico by imposing tariffs on Mexican exports, even while the USMCA remains in force.
Interesting times, to say the least, undoubtedly lay ahead, and the USMCA – perhaps in a renegotiated guise – will almost certainly be a part of them.
Indeed, even if all three parties do not confirm their desire to extend the agreement as part of the six-year review in 2026, the USMCA cannot be immediately terminated.
Instead, Mexican, U.S. and Canadian officials “will meet again in the seventh year, and each year thereafter until the 16th year,” according to an article published earlier this year by Rice University’s Baker Institute for Public Policy.
“If they cannot agree by the 16th year” – 2036 – “the agreement terminates,” wrote Baker Institute nonresident fellow Simon Lester.
Maybe Trump isn’t Mexico’s biggest problem? Maybe Mexico needs to square things up with the U.S. by FINALLY taking responsibility for its side of the border and its complicity in the illegal immigration flood into the U.S. Maybe NOW is the time to shut it down hard. Take ’em off those trains, trucks and buses, ship ’em back to wherever they are coming from, throw the outsider NGO’s out of Mexico and start acting like you care about your number one trading partner and source of remittances.
And while you are at it, strike a real blow against the cartels who have corrupted Mexico for so long.
Overnight, Mexico could change the relationship into a world beater partnership.
Literally overnight.
Yes , sir , Daniel , well said !!!
Whether you want to admit it or not Daniel, Trump is Mexico’s biggest problem. His false rhetoric and innuendo makes matters between the U.S. and Mexico harder to resolve than they should be.
While Trump may be a big “problem” for Mexico, I believe the corruption and cartels are the true biggest problem for Mexico. If Mexico sincerely wants to eradicate the narcos and free the country from the violence and corruption, I am sure Trump would be happy to help. Mexico will take hundreds of millions in guns and military aid, which end up in corrupt hands and are used against the Mexican people by officials doing the cartels bidding. Just give Trump the ok to place America’s military might on the ground in Mexico. In less than 3 months, the cartels will be eliminated. Bunker destroying smart guided missiles could destroy the tunnels and Drones could remedy most of the remaining issue with minimal civilian casualties. Certainly fewer than what is happening today. There will no doubt be soldiers placed on the border, what’s a few hundred additional miles south? President Sheinbaum would be a hero for eliminating the cartels.
Yes it is time for Mexico to own up in supporting the Biden Government, by allowing millions to enter the US illegally. Trump stopped that previously and they put their military at the border. The Dems stopped that process and we all know what happened. In many ways, Canada shoud stop the UsMc agreement. We have never been a winner, losing so many auto contracdts plus others, to Mexico. Hey, lower dolar (Peso), lower wages, not high heating bills etc. More expensive to operate in Mexico than China, but most of us get the drift. Let’s face it, a third world country anymore, many of us don’t think so. Hopefully, Trudeau won’t be around when these deciisions are made. The head of this program, must appointed again, will never deal with Feeland, as he thinks she is terrible and has no idea obout what is going on. Her record in everythihng attests to this.
Trump never stopped illegal immigration. He and COVID put a dent into it.
Don’t be too sure that Canada is happy with the trade relation with Mexico. If it turns our that USMCA doesn’t beifit Canada and the US as much as Mexico, Canada and the US might just want to shut it down. Canada’s Prime Minister is also not too happy with China. China wants to get in Mexico’s “pants” so China can use Mexico as a means to exporting the Chinese’s products made in Mexico by the “cheap Mexican labor” that exist in Mexico. Sheinbaum is “blind” and can’t see how China is “screwing” the Mexican worker with low wages’ and this is the where the “root of the poverty problem” in Mexico exist from year-to-year with no solution in sight. President Sheinbaum can’t see this “disaster” that increases the poverty in Mexico and this Chinese’s scheme is what keeps creating thousands of “poor Mexicans citizens with low wages. Sheinbaum needs to stop doing business with China and “kick” them out of Mexico, but she won’t do it.
The core issue with China is that they are a NME. If you say that fast, it sounds like ENEMY. In fact NME is Non Market Economy. Which is to say that economies that function within free and open markets are likely to NOT be able to compete with controlled economies such as China.
This condition is most prominent when global commodities rise rapidly therefore free and open markets adjust prices accordingly (inflation), while NME’s may not be subject to a similar impact.
The core issue in reality is ‘how should NME countries be treated in the economic relationships with open market countries?’
Very well put. In fact that was likely the most reasoned response I’ve read. Accurate and to the point. You can’t compare (evenly) the economies of North American countries with China because the game is played on a different field with different rules. Thanks for your insight.
I agree with you both.
Very insightful comment, thank you. Indeed, how can a country the size of China be coerced into playing by the free market playbook when it has per definition a non-democratic and authoritarian regime?
That is precisely the underlying logic with Russia, China and North Korea: It’s about regional and territorial power for the few – as opposed to democracy and prosperity for many…
If the US and Canada want to start a trade war with China AND Mexico, please tell me where their consumer goods will come from? Mexico and China make what you buy that you either don’t make yourself (Canada) or can’t afford to buy what’s made at home (US)…. And where do think you’ll get your avocados from for the Super Bowl? And your Driscoll fruit? And and … stop being so short sighted or acting all big and bad. Ending NAFTA will punish your countries more …but that seems to be the new way to behave in the world
Mexico became the US’s top trade partner in 2023. For more than ten years prior, China was consistently #1, including throughout Trump’s first term. Ah, the changes the pandemic brought…. “Near-shoring” was a primary wind behind trade changes these last 2 years … and when the numbers from the years came in, “near-shoring’s numbers,” in total, turned out to be about half the value of remittances from the US to MX. If the US takes things back 2 years (to 2022) or plays even slightly harder hard ball, certainly not a stretch of anyone’s imagination with Trump, China would be delirious. China would be #1 again. And Mexico would be left at the altar–by China.
$55 Billion in two way trade between Canada and Mexico in 2023…and that doesn’t include tourist dollars…Doug Ford is worried about cheaper cars being imported from Chinese car plants of which not one has been built in Mexico as of yet…Trump wins an election and Ford starts bloviating…not a surprise…watch for Pierre Poilivere (Canada’s supposed annoited saviour in waiting) to do the same very soon. Mexico is poised to become an economic powerhouse and these Right Wing blowhards are terrified of what a Claudia led govt might actually be capable of. Yes the cartels need to be dealt with, yes the continued importation of illicit substances like fentanyl, opiates and cocaine need to be dealt with but tarrifs and economic warfare are not the answer…continued free trade, cooperation and economic development across North America is a far more sensible solution than what these people propose. When has American military power ever led to anything good? It makes more enemies than friendships…that’s been proven multiple times.
It’s a shame that the knuckle-draggers don’t recognize México as being a part of “America” indeed an older part than most of the U.S.A. has been. I don’t like trade with China, and well remember the U.S.A. self-fleecing in outsourcing midwest industry to Asia. But, Chinese investment in Mexico keeps the jobs in America albeit at the expense of colonizing Mexican industry which I have consistently opposed. It seems that México is willing to plug the loophole on tariffs and shouldn’t be demonized by U.S.A./Canadian malpractice in creating the loophole.
Agree 100% with what Premier Ford of Canada said. North America, just like the European Union, must have a uniform tariff policy towards China whose goal is and has always been to grow at other countrie’s expense.
Let’s all take a breath. In spite of cartels and the sense of insecurity they bring, Mexico has succeeded in having a stable population vis-q-vis the number of Mexicans living without papers in the US. That’s a massive achievement. Economic growth in democracies leads to . . . more democracy. We may not like the overwhelming popularity of the Morena party, or the trifecta pulled by the MAGA party up north, but neither will topple this system. Morena will continue to jack the minimum wage; it will never be US wages, but it will mean more local buying power and, hence, more trade. Ebard and Sheinbaum will never let China pick their pockets. Criticism of their policies seems to lead to correction. As it should.
Where’s the downside?