Canadian Prime Minister Mark Carney is working urgently to mend strained ties with Mexico, after relations collapsed late last year when Canadian officials indicated a preference for pursuing a U.S. trade deal without Mexico.

Carney tried to ease tensions during a phone call with Mexican President Claudia Sheinbaum in July, referencing a handcrafted soccer ball she had gifted him previously and expressing a desire to visit Mexico soon. According to three sources familiar with the call, the gesture was part of Canada’s broader effort to restore the damaged relationship, which had been marred by dismissive remarks from figures such as Ontario Premier Doug Ford, who previously called comparisons between Canada and Mexico “deeply insulting.”

Although Mexico and Canada have shared three decades of trilateral trade under NAFTA and the current U.S.-Mexico-Canada Agreement (USMCA), recent events have reignited old tensions. The deterioration began in earnest last November, when former Prime Minister Justin Trudeau floated the idea of a bilateral trade pact with the U.S., asserting that Canada was more aligned with Washington on key global issues like China.

Soon after, Trudeau made an unannounced visit to President Donald Trump at Mar-a-Lago, catching Mexican officials off guard. According to one Mexican source, President Sheinbaum ordered her government to freeze communications with Canadian counterparts until Trudeau left office.

Since then, the tables have turned. Trump recently granted Mexico a 90-day reprieve from new tariffs, maintaining them at 25%, while increasing tariffs on Canadian goods to 35%. Now, Canada is trying to re-establish its relationship with Mexico in hopes of preserving the USMCA, which Trudeau had previously appeared willing to abandon.

Carney has stressed the importance of maintaining the trilateral agreement, and both Canada’s foreign and finance ministers recently travelled to Mexico to engage with senior officials. Foreign Minister Anita Anand told Reuters the visit aimed to “kick start” the relationship. President Sheinbaum echoed this sentiment in a post on X.

“We’re strengthening the relationship between our countries,” the post said.

Observers say the future of the trade pact will significantly impact businesses across North America, from the auto industry to medical suppliers. Former Mexican trade negotiator Kenneth Smith Ramos questioned whether Mexico and Canada are truly coordinating, or simply pursuing separate strategies with the U.S. He recalled that during the 2018 USMCA negotiations, it was Mexico that insisted on keeping the pact trilateral, a gesture that made Canada’s later overtures toward a bilateral U.S. deal especially bitter for Mexican officials.

However, a Canadian source familiar with those negotiations disputed this version of events, accusing Mexico of cutting a deal with the U.S. behind Canada's back. This history, the source argued, partly explains Canada’s later interest in sidelining Mexico.

“If Mexicans feel betrayed, they should look in the mirror,” the source said.

The fallout from Trudeau’s Mar-a-Lago visit only worsened relations, with public spats between Trump and Trudeau.

In contrast, Sheinbaum maintained a conciliatory approach with Trump. Since becoming prime minister in March, Carney has tried to repair ties, including inviting Sheinbaum to the G7 summit in Canada—a move seen by some, like American Chamber of Commerce Mexico CEO Pedro Casas, as a symbolic reset. Sheinbaum eventually accepted the invitation, though she was concerned when Trump left the summit early without meeting her.

In a follow-up call in July, Carney reassured Sheinbaum that Canada’s new restrictions on steel imports would not affect Mexican products, a move viewed as another goodwill gesture.

Sheinbaum, despite her frustrations, remains committed to salvaging the USMCA, which if not renewed next year, will expire in 2036. According to a Mexican official, U.S. Secretary of Commerce Howard Lutnick has floated the idea of scrapping the trilateral deal in favour of a U.S.-Mexico bilateral agreement- something Mexico opposes.

Former Mexican negotiator Juan Carlos Baker noted that Mexico would be at a disadvantage negotiating alone with the U.S., saying, “It’s always better to have a three-player game.”

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