Mark Carney, North American Trade, and Canada–U.S.–Mexico Relations

How is Prime Minister Mark Carney shaping Canada’s trade and diplomatic relationships with the U.S. and Mexico during his early tenure?

In this wide-ranging interview, Javier Palomarez shares his insights on Prime Minister Mark Carney's early leadership, highlighting his pragmatic approach to trade and diplomacy. He emphasizes the importance of Canada–U.S.–Mexico relations under the USMCA, highlighting mutual economic and strategic interests. Palomarez warns of declining trust and trade due to tariffs and political rhetoric, noting boycotts and shifts in public sentiment in Canada. He advocates for restoring confidence and stability through diplomacy and collaboration. With key industries like automotive and energy at stake, Palomarez urges leaders to find common ground and preserve the economic backbone of the Western Hemisphere.

Scott Douglas Jacobsen: Javier Palomarez, what are your general sentiments regarding Mark Carney's first few weeks in office as Prime Minister, particularly on trade and economic policy? How is this reflected in Mexico's relationship with the United States?

Javier Palomarez: I'm impressed with Prime Minister Carney. He has handled himself admirably.

Both he and President Claudia Sheinbaum have done a commendable job in approaching the Canada–Mexico relationship and recent North American dialogue with pragmatism. They have both been diplomatic and have helped lower tensions while establishing a more respectful and equal footing in discussions.

The U.S.–Canada relationship has historically been strong. For decades, it has remained mostly positive. Economically, this partnership has supported millions of jobs and small businesses across both countries.

According to the latest trade data, Canada is the United States' second-largest trading partner, with more than $750 billion in two-way goods and services traded annually. The trade relationship encompasses key industries, including automotive parts, timber, crude oil, natural gas, and others. It truly covers the whole spectrum.

So, I'm pleased with how the Prime Minister has steered these conversations. I'm hopeful that both nations will continue to engage constructively because we depend on each other. This relationship must remain symbiotic.

Jacobsen: What about the security aspect of the relationship? Is there a broader strategic element at play?

Palomarez: Now, Scott, I'm not a national security expert by any stretch, but it's evident we also share strategic defence interests. For instance, Canada has been in discussions about participating in missile defence upgrades, including potential alignment with aspects of the U.S. Integrated Air and Missile Defense system—though not the Israeli-developed Iron Dome, which is a separate, short-range missile defence system.

This relationship—between the United States, Canada, and Mexico—has broad economic and geopolitical significance. It is mutually beneficial, and the United States would be unwise to undermine it.

The Canada–U.S.–Mexico triad—under the USMCA, which replaced NAFTA in 2020—is the economic backbone of the Western Hemisphere. Together, we form the largest trading bloc in the region. We are obligated to respect this interdependence and keep building on the strong foundation we already have.

Looking ahead, the USMCA is scheduled for a joint review in 2026, six years after it enters into force. That means we need to begin preparing now—to ensure the agreement strengthens mutual gains, addresses evolving concerns, and gives all three countries a fair say.

I'm thankful that Prime Minister Carney has demonstrated true diplomacy in managing these complex dynamics and helped keep the relationship on course.

Jacobsen: Something you and others have mentioned to me—perhaps not in these exact words—is that stability is good for business. Why is that the case? And what kinds of actions from political leaders can create instability? How has Carney managed to avoid those?

Palomarez: Instability—the inability to plan or invest confidently—is detrimental to businesses on both sides of the border. When markets and regulatory environments are uncertain, companies hesitate. That slows growth.

By avoiding inflammatory rhetoric and resisting political bait, Carney has helped maintain a level-headed approach. He understands that business requires a stable environment to make long-term plans, build partnerships, and commit to capital expenditures. Without that, business 26 confidence drops. And that is not good for anyone—Canadian, American, or Mexican.

Your Prime Minister's willingness and ability to calm the conversation—to avoid taking the bait that's been thrown—and instead think strategically and pragmatically is critically important right now. I'm thankful to both him and President Sheinbaum in Mexico because that's precisely what we need in a trade partner. We need mutual respect and trust. Without that, there will not be a stable environment in which businesses on both sides of the border can plan, invest, grow, and drive our economies forward.

Some trade provisions can be renegotiated during this period—particularly under the USMCA review. The industries that are coming online or have matured in recent years will be key for Canada to consider during negotiations with the United States—and vice versa.

Jacobsen: Which industries, in your view, are most relevant here?

Palomarez: Well, right off the bat, there's the automotive industry. Parts go back and forth multiple times across borders before final assembly and sale. Energy is another critical area for all three partners—especially Canada and the U.S. Pipelines, crude oil, and natural gas—these are foundational sectors for both countries. We must be mindful of this and safeguard those shared interests.

There's a lot at stake. The relationship has taken a hit. It began with U.S. tariffs on non-USMCA goods and then extended into energy, with a 10% tariff applied. In response, the Prime Minister issued retaliatory tariffs. As of now, we're seeing approximately a 1.5% decline in trade on both sides. There's been a measurable decrease in cross-border tourism—fewer Canadians visiting the U.S. and fewer Americans going to Canada.

We're also seeing signs of a consumer backlash. A poll found that roughly 91% of Canadians expressed a desire to reduce their dependence on American goods. Such sentiments are not conducive to the American business environment. The U.S. needs to understand just how critically important this relationship is. We often take it for granted and fail to reflect on it in a meaningful way.

But the trade you see is just the tip of the iceberg. We share far more than a border—we share people, culture, language, and history. There are also significant national security implications. There is so much built into this relationship.

So, given that long-standing history, calmer heads will prevail. We will normalize relations and return to a place of mutual respect and productive trade.

Jacobsen: As a general rule, I tend to trust that high-income societies function best when mutual trust is intact. When political relationships deteriorate, trust between the societies involved erodes as well. So how can Prime Minister Carney work with President Trump to repair and rebuild trust and, in turn, enhance the potential for income growth for both nations?

Palomarez: Some of the answers here are pretty obvious—mutual respect, returning to the negotiating table, and operating from a shared commitment to restoring trust.

Interestingly, Carney and Trump have more in common than some people might expect. They both understand the importance of financial markets and macroeconomic stability, albeit from different perspectives. If they can focus on mutual interest rather than ideology and rebuild institutional respect across the board, we'll be in a much better place.

They both face the challenge of navigating historic economic pressures—challenges we have not seen in either country in recent memory. Both are under immense pressure from their respective populations to address the failures of prior administrations. They are each working to secure a better future for their nations and, in doing so, for this hemisphere as a whole.

So yes, they have a lot in common if you think about it. Both Prime Minister Carney and President Trump marked decisive political shifts in their respective countries. If they approached the situation from that perspective—recognizing their shared challenges and goals—they could find real common ground. They both face the pressure of proving themselves in contrast to the leaders who preceded them.

In that commonality lies real potential: the chance to work together rather than continue down a path of friction. The United States would benefit from remembering the long and storied partnership with Canada—one that has repeatedly worked to the advantage of both countries. That shared history holds not just the challenge but also the opportunity to restore and strengthen the relationship.

Jacobsen: Are you aware of the recent changes Prime Minister Carney has made to his cabinet? Do you think those changes might offer insight into how he plans to move forward economically—both in terms of policy direction and resource allocation for government-supported business ventures?

Palomarez: Not in great detail—only from a distance. But again, like Trump in his way, Carney is a man on a mission. They both campaigned on specific mandates and now they're working to deliver on those promises. There's a lot to prove—and not a lot of time to do it.

It's like trying to turn an ocean liner around in a narrow canal. It's slow, it's complicated, and it takes precision. They're both facing that challenge simultaneously.

So, amidst all the upheaval and change in both countries, we're better off respecting each other and identifying points of alignment—ways we can normalize the relationship and work together for the benefit of both nations and their economies.

Jacobsen: Has any sector in business or trade relations, which may have initially seemed damaged during recent tensions, actually turned out to be better off in the long run? Perhaps it was a sunset industry whose decline was accelerated.

Palomarez: Yes. One of the things I've observed—in the cases of Mexico, Canada, and even the European Union—is that long-standing trade relationships can be significantly damaged, if not completely undone, in a matter of weeks. And once that damage is done, it's tough to rebuild the trust.

Trust is fundamental to the U.S.–Canada relationship. And the fear I have is that both the American and Canadian people have long memories. When that trust is broken, it can take years to restore fully. I'm fearful, again, that Canadians have started to boycott American goods. I worry that it may take a while for people to forget—and, more importantly—forgive. So, for me, the sooner we get back to the business of finding common ground and working toward normalization, the better.

My plea to our own President is to actively seek out those points of commonality. We have far more in common than we have in areas where we differ. There is a necessary interdependence and collaboration that has to exist between our countries. If you doubt that, look at a country like Israel and ask what it feels like to have a neighbour across the border who may not have your best interests at heart. It is a stark contrast to what we have enjoyed with Canada—and what I fear we have taken for granted.

A strong economic and trade relationship with a neighbour like Canada is a national asset. It is something we need to preserve, not erode.

Palomarez: Absolutely. Thanks, Scott. Good luck, and I'll be in touch soon.

Jacobsen: Safe travels, Javier.

Scott Douglas Jacobsen is a Writer and Editor for A Further Inquiry. He is the publisher of In-Sight Publishing (ISBN: 978-1-0692343) and Editor-in-Chief of In-Sight: Interviews (ISSN: 2369-6885). He writes for The Good Men Project,International Policy Digest (ISSN: 2332–9416), The Humanist (Print: ISSN 0018-7399; Online: ISSN 2163-3576), Basic Income Earth Network (UK Registered Charity 1177066), A Further Inquiry, and other media. He is a member in good standing of numerous media organizations.

Photo by Greg Rosenke on Unsplash