A 30-year-old trade agreement and a long-standing partnership is at risk due to U.S. President Donald Trump’s confrontational style. Can the Three Amigos find a way to continue being the most dynamic trade zone in the world? This is an analysis of three very agitated months in North America
In 2024, the value of goods and services traded across North America neared $1.8 million every minute. This year it is projected to exceed $2 trillion a year of trade value, positioning the United States-Mexico-Canada Agreement (USMCA) as one of the largest free trade zones in the world. With Trump back in office, the continuity of this partnership cannot be taken for granted, despite its dynamic trade flows.
The USMCA encompasses a market of 510 million people, with a combined GDP exceeding $30 trillion—nearly 30% of the global economy—establishing Mexico and Canada as the United States’ principal trading partners.
What began as trilateral discussions in the 1980s culminated in the signing of the North American Free Trade Agreement (NAFTA) in October 1992, the precursor to the USMCA. Since then, trade has remained the cornerstone of a partnership built on economic cooperation and shared interests. By 2023, Mexico emerged as the United States’ top trading partner, with a total two-way goods trade valued at $807 billion. In comparison, Canada ranked as the second most significant trading partner, reaching $782 billion, while China secured the third position with $576 billion, according to the U.S. Department of State. Meanwhile, trade between Mexico and Canada amounted to $87.2 billion in the same year.
Back in November 2024, following Trump’s victory in the U.S. presidential election, world leaders congratulated him and expressed their desire to maintain their usual relations with the United States. America’s partners seek a stable and reliable economic partnership; however, such certainty remains elusive under a second Trump administration, given his unpredictable approach to policy and negotiations, marked by coercion with the State apparatus, and menacing remarks on social media, all under its America First principle.
In line with his doctrine of aggressive negotiations, Trump never ceased to make incendiary declarations, from buying Greenland to retaking control of the Panama Canal. It was no surprise that Mexico was targeted in Trumps’ statements, but for the first time Canada experienced the threats of facing U.S. tariffs. As president-elect, he stated that on his first day of mandate he would sign an executive order to impose a 25% tariff on goods from Mexico and Canada if they did not stop the influx of immigrants and drugs coming from both borders.
Since then, Trump has assumed power, materialized his tariffs threats, and has paused the tariffs.
How have Mexico and Canada reacted so far and what can we expect from North America’s Three Amigos? Is this the dusk of a historic partnership?
The reactions of Mexico and Canada
Mexican President Claudia Sheinbaum took a public and diplomatic stance in response to Trump’s tariff threats. In an open letter addressed to the then-president-elect, Sheinbaum detailed Mexico’s ongoing efforts to curb irregular migration, emphasizing through US Customs and Border Patrol (CBP) figures that the number of migrant encounters at the U.S.-Mexico border has decreased by 75% and that a significant portion of these encounters occurs due to the U.S. government’s CBP One asylum program.
Beyond migration, Sheinbaum underscored Mexico’s commitment to combating drug trafficking, pointing to recent government actions that have led to significant drug seizures. She also referenced a new legislative initiative sent to the Mexican congress to classify the production and distribution of fentanyl and other synthetic drugs as serious crimes, punishable without bail.
Sheinbaum’s response was not solely directed at Trump; implicitly, it was a message for the Mexican electorate. Aware that Trump was unlikely to pay attention to such a letter, her statement served as a reaffirmation of Mexico’s institutional approach to the bilateral relationship. Sheinbaum stressed the importance of cooperation and mutual interests, asserting that Trump’s main concerns—migration and drug trafficking—are shared responsibilities that require joint efforts, rather than unilateral measures.
In contrast to Mexico’s public and institutional response, Canadian Prime Minister Justin Trudeau adopted a more discreet and pragmatic approach. Shortly after Trump’s declarations, Trudeau promptly traveled to Mar-a-Lago to hold in-person discussions with the U.S. president-elect. Trudeau’s strategy focused on engaging in direct dialogue by visiting Mar-a-Lago, a location symbolic as “Trump Territory,” during the Thanksgiving celebration hosted by Trump. A run to Trump’s private residence to attend an unofficial event, instead of the usual institutional and official spheres. However, this move did not alleviate the pressure of the tariff threat or reaffirmed the strength of Canada, nor stopped the mockery of being called the Governor of Canada by Trump and the calling for Canada to become the 51st U.S. state.
By addressing the matter through private negotiations, Trudeau aimed at retaining the ability to manage the domestic narrative, shaping public statements to emphasize positive outcomes while avoiding the scrutiny of an open diplomatic dispute. This strategy provided him with the flexibility to navigate complex political dynamics and project confidence in protecting Canada’s economic priorities, all while steering clear of the confrontational rhetoric that defines Trump’s broader trade agenda. However, this approach, which has rendered unfruitful, marks a departure from Trudeau’s previous commitment to addressing North American trade challenges through a trilateral framework and supporting the (re)negotiation of the free trade agreement.
The Canadian position consistently suggested a deliberate effort to differentiate itself from Mexico regarding drug trafficking and illegal immigration—issues central to Trump’s rationale for imposing tariffs. Trudeau’s approach aligned with the stance of several Canadian provincial premiers, who have called for a bilateral trade agreement with the United States that excludes Mexico, arguing that prioritizing a direct Canada-U.S. trade relationship would better safeguard national interests and ensure economic stability.
The divergence in Mexico and Canada’s responses shows how Trump’s declarations have the power to destabilize one of the world’s most prolific trade alliances.
What was once a partnership rooted in shared economic interests and cooperation now faces internal divisions, with Canada seeking to distance itself from Mexico and prioritize its own interests in the form of a bilateral agreement with the US.
What lies ahead for the North America partnership?
The tariff threat materialized on 1 February 2025. Trump imposed a 25% tariff on imports from Mexico, Canada, and China, hinting the alleged threat “posed by illegal aliens and drugs, including deadly fentanyl” is caused by unfulfilled commitments to stop irregular immigration flows and illicit drug flows towards the U.S.
Both Claudia Sheinbaum and Justin Trudeau responded via public statements. In line with their respective previous declarations, both announced commensurate retaliatory tariffs.
Trudeau announced a matching 25% on all U.S. goods, highlighting the immediate effect on everyday products, such as food, produce, clothing and materials like lumber and plastic. Trudeau explicitly stressed, in a message to the U.S. citizens, that tariffs would hurt the American people, jeopardizing American jobs and increasing prices. He also stressed the successful vision Trump has for the U.S. can only be realized with Canada as a partner.
Sheinbaum, on the other hand, also responded with a public speech, but she did not rush to announce specific measures, but to state that her team was cautiously preparing a package of proportionate measures to subsequently respond to the tariffs. Instead of focusing on the effects for the American people, she chose to stress again that the drug issue is a shared responsibility, and that the U.S. had failed to combat drug trafficking on its territory, and to address it as a public health issue. Claudia Sheinbaum asserted that a partnership between Mexico, not tariffs, were necessary: “coordination yes, subordination no.”
On 3 February, tariffs on Mexico and Canada were put on hold for 30 days, and the USMCA is set for review on 1 July 2026, and early indications suggest it will take the form of a renegotiation rather than a straightforward revision. Key industry sectors, such as automotive, machinery, energy, and agriculture—cornerstones of North American trade—are expected to be at the forefront of these discussions.
Amidst uncertainty, the very foundation of North American cooperation appears increasingly fragile, tested by rhetoric that threatens to undermine long-standing relationships—more than 30 years of three amigos.
Is this a bump in the North American Partnership or the beginning of the end of free trade in the region? Is this the end of the Three Amigos?
Julio Vazquez Aguilar and Pablo Guillén are students in the Master of Public Policy (MPP) Class of 2025 at The Hertie School.