As the 2026 USMCA review approaches, Canada and Mexico are launching a new bilateral "action plan" to deepen economic integration and coordinate on strategic sectors like critical minerals and energy to ensure continental stability.
As North America approaches the 2026 review of the United States–Mexico–Canada Agreement (USMCA), uncertainty has become the defining feature of the continental economic landscape. Against this backdrop, recent discussions between Mexico and Canada to expand and deepen their bilateral economic relationship take on new significance.
For Mexican President Claudia Sheinbaum and Canadian Prime Minister Mark Carney, who met in September 2025, the first question is whether USMCA will survive. If it does, the next questions to ask, are what kind of agreement it will be after 2026, and how much friction national economies and private firms must absorb along the way. In that context, government representatives and more than 400 private companies from the two countries met in Mexico City in February to launch a new bilateral initiative to deepen their economic ties.
Mexican Secretary of the Economy Marcelo Ebrard announced the initiative following a meeting with Dominic LeBlanc, Canada’s minister responsible for Canada–US trade, intergovernmental affairs, and the Canadian economy. The discussions centered on strengthening bilateral economic ties at a moment of uncertainty in North America. After the meeting, Ebrard explained that both governments are preparing a formal “action plan” aimed at expanding bilateral investment, increasing trade flows, reducing regulatory barriers, and facilitating commercial integration between the two countries.
The proposed plan, expected to be unveiled in the second half of 2026, will prioritize collaboration in strategic sectors, including critical minerals, port development, infrastructure investment, and supply chain security. In addition to economic coordination, both sides signaled that enhanced cooperation on security-related matters will form part of the framework, underscoring the broader strategic dimension of the initiative beyond trade alone.
This effort to strengthen Canada–Mexico ties should be seen less as a symbolic diplomatic gesture and more a strategic hedge: an effort to reinforce North American integration from within while reducing exposure to episodic US political volatility.
The USMCA’s six-year review clause was designed as a political safety valve. It requires the parties to formally assess the agreement’s performance and agree to extend it for another 16 years. If they do not, the agreement enters a rolling annual review cycle. Legally, the review is not a renegotiation. Politically, however, it has become one.
The United States’ willingness to use trade tools to advance broader strategic goals has injected considerable uncertainty into the future of the trilateral relationship. This builds on the use of industrial policy under previous administrations, which blurred the line between trade agreements and strategic competition. Supply chains are no longer merely commercial networks; they are instruments of national security. For Mexico and Canada, the 2026 review is therefore a stress test of North America’s ability to function as a coherent economic bloc.
While the review may not dismantle the agreement, it could introduce new conditionalities, stricter enforcement, or sector-specific tensions, particularly in autos, energy, agriculture, and critical minerals. It is precisely this environment of structured uncertainty that gives new urgency to Canada–Mexico economic coordination.
Canada and Mexico have long spoken of deepening bilateral ties. Since the implementation of NAFTA in 1994, both governments have established working groups, high-level dialogues, and sector-specific cooperation frameworks. Yet the economic relationship remains underdeveloped relative to its potential.
Trade between Canada and Mexico has grown, but it remains modest compared to each country’s trade with the United States. Supply chains remain overwhelmingly focused on the giant American market. Investment flows exist, such as Canadian mining investment in Mexico, but have not transformed the broader economic architecture.
There are two main reasons for this, one structural and one specific to Mexico.
First, there is the gravitational pull of the US. Firms from both countries optimized their operations around access to the US market, not around direct Canada–Mexico integration. This made perfect sense in an era of stable trade agreements, but it also hindered the growth of the independent bilateral relationship
Second, there is regulatory and legal uncertainty. Significant differences in the regulatory and legal frameworks were hidden by the investor protections in the NAFTA. Under USMCA those protections were diluted and recent legislative and regulatory changes in Mexico have exposed Canadian firms to new risks.
In periods of stability, there was little incentive to fundamentally recalibrate this dynamic. The NAFTA, the predecessor to the USMCA, functioned as a reliable trilateral framework, and both Mexico and Canada benefited enormously from it. Stability, however, is no longer taken for granted.
The emerging global economic environment is defined by fragmentation. Strategic competition between the United States and China is reshaping supply chains. Industrial policy has reemerged as a central feature of economic governance. Trade policy is increasingly intertwined with national security. For middle powers such as Mexico and Canada, the key concept is strategic optionality, that is the ability to diversify partnerships, reduce single-market vulnerability, and maintain leverage in negotiations.
Under that logic, strengthening Canada-Mexico ties enhances optionality in three ways:
Importantly, this is not an anti-American strategy. Both countries remain deeply integrated with and economically dependent on the United States. Rather, it is a stabilizing strategy designed to reinforce continental resilience.
The 2026 USMCA review will unfold amid domestic political considerations in all three countries. Trade agreements are no longer technocratic instruments; they are politically charged symbols and tools of economic statecraft. In the United States, industrial policy, tariffs, supply chain vulnerability, and economic nationalism command bipartisan attention. In Mexico, economic sovereignty remains a powerful political theme. In Canada, supply chain resilience and climate policy are central priorities.
A coordinated Canada–Mexico front could:
But unity cannot be assumed. Divergences on China policy, environmental standards, and state participation in energy markets could complicate alignment. The challenge for Mexico and Canada is to move from reactive coordination to strategic planning. A number of areas present windows of opportunity:
Perhaps no sector better captures the strategic logic of this moment than critical minerals. The North American countries in general, but especially the United States, face a structural vulnerability in mineral supply chains essential for:
China’s dominance in processing and refining has sharpened the urgency of supply chain diversification. The United States has launched a series of initiatives aimed at strengthening domestic and allied mineral supply chains. Both Canada and Mexico are indispensable to that effort.
Canada is a mining powerhouse. It possesses vast reserves of lithium, nickel, cobalt, graphite, and rare earth elements, alongside deep capital markets and technical expertise in exploration and environmental management. In 2020 Canada and the U. signed a Joint Action Plan for critical minerals, which has contributed to more than $70 million in US investment in the sector in Canada. Prime Minister Carney, however, has said that future collaboration with the US should take place under the auspices of the USMCA.
Mexico is one of the world’s leading producers of silver and a major producer of copper and zinc. It has significant lithium potential and hosts extensive mining operations, many financed by Canadian firms. Mexico and the United States recently signed a Joint Action Plan for Critical Minerals, though details are rather vague at this moment.
The potential for a coordinated Canada–Mexico critical minerals strategy is significant, especially given the strong presence of Canadian mining firms in Mexico. But the focus should not just be on extraction; the true bottlenecks in the ecosystems are to be found in processing, refining and upgrading.
Energy cooperation presents both opportunity and tension. Canada remains an energy superpower, with vast oil sands reserves, natural gas production, hydroelectric capacity, and uranium resources. Mexico possesses significant hydrocarbons but faces declining production, electricity infrastructure bottlenecks, and ongoing debates over the role of private investment.
The complementarities are clear:
However, energy has also been one of the most contentious areas under USMCA dispute settlement. The 2026 review may revisit energy market access issues. If so, Canada and Mexico would benefit from entering the review with a shared understanding of energy security, investor protection, and regulatory alignment. Moving from defensive litigation to proactive coordination would strengthen both countries’ negotiating positions.
If Canada and Mexico are serious about deepening their economic relationship ahead of the 2026 USMCA review, infrastructure cooperation must move to the center of the agenda. Strengthening port coordination, rail logistics, and airport cargo integration between Canada and Mexico would not replace US-centric trade flows, but it would diversify them. Mexican Pacific and Gulf ports could serve as gateways for Canadian firms seeking expanded access to Latin America, while Canadian Atlantic and Pacific ports offer Mexican exporters alternative routes to Europe and Asia. Coordinated investment planning, shared digital customs platforms, and aligned regulatory standards would lower transaction costs and build genuine resilience into continental supply chains.
Rail infrastructure is particularly critical. Efficient rail corridors linking Mexican industrial clusters with Canadian intermodal networks would strengthen automotive, agri-food, and critical mineral supply chains. As supply chain security becomes a national security concern in Washington, Ottawa, and Mexico City alike, reliable overland logistics are no longer simply commercial assets: they are strategic infrastructure. Joint planning on rail modernization, cross-border inspections, and cargo digitization would help insulate North America from external shocks while reducing bottlenecks that currently limit the full potential of trilateral integration.
Energy infrastructure cooperation is equally urgent. Canada’s strength in hydrocarbons, hydroelectricity, and emerging hydrogen development complements Mexico’s manufacturing base and growing electricity demand. Coordinated investment in LNG facilities, electricity transmission interconnections, grid modernization, and clean energy deployment would enhance regional energy security while supporting industrial competitiveness. However, infrastructure capital requires policy stability. For Canada–Mexico cooperation to attract sustained private investment, both governments must provide transparent regulatory frameworks, predictable permitting timelines, and credible dispute resolution. In the context of USMCA uncertainty, shared infrastructure development would signal that continental integration is not merely a trade arrangement, but a long-term strategic project.
The USMCA framework provides dispute resolution mechanisms, but reliance on litigation is a sign of misalignment, not partnership. A proactive Canada–Mexico alignment would reduce disputes rather than escalate them and if Mexico seeks to attract deeper Canadian investment in mining, energy, advanced manufacturing, and processing, it must offer:
When he was a central banker, Prime Minister Carney embraced the importance of institutional credibility. It is time for President Sheinbaum to do the same. Financial markets reward stability and punish unpredictability. For Mexico, strengthening regulatory clarity in mining and energy would not represent a concession; it would be a competitiveness strategy, both strengthening the economy and increasing autonomy. The ongoing talks between the heads of government, and between their business communities, can be used as a platform to make important adjustments in the rules impacting investors in Mexico.
The Canada–Mexico economic action plan could join a long list of well-intentioned but under-implemented bilateral initiatives. Or it could mark the beginning of a more mature phase of North American integration, one in which Mexico and Canada actively shape continental strategy rather than merely reacting to US policy shifts.
Previous Canada-Mexico initiatives often lacked urgency. The NAFTA and USMCA functioned as a stable platform, and US market access was secure. Today, uncertainty precipitated by both the review process and the willingness of the US government to challenge the status quo may finally provide the incentive necessary to translate diplomatic rhetoric into meaningful collaboration.
Several factors come into play. The current uncertainty surrounding relations with the US raises the value of diversification, and Carney seems to have embraced this wholeheartedly. At the same time, US-China strategic competition raises the value of supply chain resilience, and the North American partners can be part of the solution. The need to cut costs and to embrace economies of scales calls for greater regulatory alignment. If Canada and Mexico can align on critical minerals, energy cooperation, and investor certainty before 2026, they will enter the review process from a position of strength rather than defensiveness.
