Mexico Says U.S. Trade Talks Are Advancing While Canada Remains Stuck in Trump’s Tariff Fight

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North America’s trade negotiations are moving on two visibly different tracks. Mexican President Claudia Sheinbaum says talks with Washington are advancing, with both governments testing whether an interim agreement can be reached before the November 3 U.S. midterm elections. Mexico is pressing for meaningful relief from American tariffs on automobiles, steel and aluminum while trying to keep the wider USMCA relationship intact.

Canada is in a tougher position. Ottawa says discussions with the United States have intensified slightly, but progress remains limited after broader negotiations broke down in August and President Donald Trump widened tariffs on Canadian goods. The contrast does not mean Mexico already has a deal or that Canada has no path forward. It does show how Trump’s tariff strategy is pulling the three-country trading system into separate bilateral bargaining tracks.

Mexico’s Negotiating Track Is Moving Faster

Mexico’s current advantage is momentum rather than a finished agreement. Sheinbaum said on October 28 that the two governments were making progress in areas where they could strengthen both economies, while Reuters reported that officials were assessing whether an interim deal could be completed before the U.S. midterms. That follows months of formal bilateral negotiations tied to the USMCA review, including rounds in Washington and Mexico City.

The tone has also been constructive. U.S. Trade Representative Jamieson Greer and Mexican Economy Secretary Marcelo Ebrard have described continued engagement on autos, steel, aluminum, agriculture, labor and economic security. Sheinbaum said earlier in October that Mexico was “very close” but still had unresolved issues. For manufacturers in places such as Monterrey, Saltillo and Puebla, the distinction matters: progress reduces uncertainty, but until tariff terms are signed, investment plans and cross-border pricing still have to account for the risk that talks could stall.

Tariff Relief Is Mexico’s Immediate Goal

Mexico’s immediate objective is straightforward: reduce the tariffs already hitting its most important industrial exports and prevent additional duties from being added. Sheinbaum has repeatedly identified automobiles, steel and aluminum as the central pressure points. On October 20, she said Mexico wanted existing tariffs reduced as much as possible and no new tariffs imposed while negotiations continue.

That focus reflects the structure of Mexico’s trade relationship with the United States. Vehicles, machinery and electrical equipment are among Mexico’s leading exports north of the border, and industrial supply chains often cross the border multiple times before a finished product reaches a buyer. Tariffs therefore do not land neatly on one country or company. They can raise costs for a Mexican assembly plant, a U.S. parts supplier and ultimately an American dealership. Mexico is seeking relief without accepting conditions it believes would damage employment, domestic industry or its domestic legal policy framework.

Washington Wants More Than Lower Tariffs

Washington’s demands go well beyond headline tariff rates. Reuters reported that the United States wants changes involving automotive content and Chinese investment, while official U.S.–Mexico negotiating statements show discussions on rules of origin, economic security, agriculture, labor, the environment and regulatory compatibility. Washington’s broader goal is to make North American trade more tightly centered on production inside the region.

Autos are especially sensitive. U.S. officials have pushed for tougher rules governing how much North American content a vehicle must contain and where that value is created. Greer has also argued for tighter rules in strategic sectors so fewer components come from Asia. For automakers, that can reshape sourcing decisions stretching from semiconductors and software to engines and stamped metal. Mexico can offer cooperation on regional supply chains, but Sheinbaum has drawn a line against commitments she says would violate Mexican law, sovereignty or the government’s obligation to protect domestic jobs.

Canada’s Broader Talks Broke Down

Canada’s route has been far more confrontational. Broader negotiations stalled in August after Ottawa walked away from the table, and the United States imposed 50% tariffs on a wide range of Canadian imports. Canada responded with countermeasures. By September, the dispute had widened further as Washington moved against Canadian alcohol, motorcycles and dairy products, turning a negotiation over market access into a visible trade fight.

The financial scale is significant. Canada said its September counter-tariffs covered C$27.6 billion in U.S. imports, with rates of 15%, 25% and 50% across products including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. Discussions have since resumed, particularly around Section 232 duties on steel and autos, but Ottawa said on October 28 that progress was still limited. Prime Minister Mark Carney has maintained that Canada will sign only an agreement it considers beneficial to both countries, leaving the core trade dispute unresolved.

The Economic Stakes Are Enormous

The reason Ottawa and Mexico City keep returning to the table is simple: the commercial relationship with the United States is too large to treat as a side issue. U.S. goods trade with Mexico totaled about US$871.6 billion in 2025, while goods trade with Canada reached roughly US$715.5 billion. Adding services pushes bilateral relationships higher and places an enormous amount of business activity inside the negotiating arena.

Those figures translate into operating decisions. A transmission may be produced in one country, incorporated into a vehicle in another and sold in the third. Energy, machinery, food, electronics and medical products move through similarly integrated channels. Mexico’s 2025 goods exports to the United States exceeded US$534 billion, while U.S. imports from Canada totaled about US$382 billion. Even modest tariff changes can affect billions of dollars in trade. Businesses are watching tariff rates, exemptions, quotas, origin rules and the duration of any agreement.

USMCA Is Still Alive, but Less Predictable

The dispute is unfolding under a trade agreement that still exists but no longer offers long-term certainty. The United States declined on July 1 to renew the USMCA in its current form for another 16 years. Under the agreement’s review mechanism, that decision did not terminate the pact. USMCA remains in force while the three governments move into annual reviews unless they later agree to extend it.

That distinction matters for companies making long-lived investments. A factory, battery plant or steel mill is financed over years, not election cycles, so annual reviews can make policy risk harder to price. Canada has emphasized that the agreement remains in force until 2036 and can still be renewed for another 16-year term. The United States is already preparing for the 2027 review, with USTR launching a consultation process in October. Bilateral tariff talks are therefore intertwined with a recurring regional negotiation.

Mexico and Canada Are Playing Different Hands

Mexico and Canada are not simply receiving different treatment; they have also chosen different negotiating postures. Greer described Mexico’s approach as pragmatic during the summer, while criticizing Canada for failing to produce concessions Washington wanted. After Canadian negotiations collapsed, Reuters reported that Mexico increasingly emphasized avoiding direct confrontation and keeping bilateral talks moving in hopes cooperation would produce tariff relief.

That does not mean Mexico is conceding every U.S. demand. Sheinbaum has repeatedly said there are issues on which the governments still disagree, and she has rejected accepting measures that would harm Mexico’s economy or violate its constitution. Canada, meanwhile, has shown greater willingness to retaliate and reject terms Ottawa views as economically unacceptable. The result is a striking split inside a trade bloc designed to operate trilaterally: Mexico is trying to lock in a workable bargain with Washington, while Canada is negotiating from inside an active tariff dispute today.

The Midterms Are a Deadline Without Being a Deadline

The November 3 midterm elections have become a political marker even though there is no formal deadline for a U.S.–Mexico agreement. Officials on both sides have expressed hope that a deal can be reached before voting day. An agreement would give Mexico tariff relief and investment certainty, while giving Trump a trade-policy win as tariffs become politically sensitive in some U.S. border states.

Canada faces the same calendar but with less movement. Trump has said the dispute could be resolved soon, yet Ottawa’s latest assessment was that progress remained limited and Carney said Canada was not yet where an acceptable deal had emerged. Even if Mexico reaches an interim arrangement first, the North American story will remain unsettled. USMCA’s annual review process continues, the United States is gathering comments for 2027, and unresolved rules on autos, metals, investment and supply chains could keep the region negotiating beyond election day itself.

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