The continual message from President Trump to President Claudia Sheinbaum has been clear, ‘clean it up or possibly we will’, as Trump has publicly and repeatedly said Sheinbaum and the Mexican government were under the control of Mexican cartels.

Following the daring capture of Venezuela dictator Nicholas Maduro, Mexican President Sheinbaum took notice.  In the past few months dozens of government officials and cartel members have been targeted, arrested, indicted, extradited and removed from positions of influence.

Today, Mexican Security Minister Omar García Harfuch announced the arrest of Cuautla Mayor Jesús Corona Damián (pictured left).

(Bloomberg) — Mexican authorities detained the mayor of a historic city near the capital, the latest move designed to show the government is rooting out corrupt politicians from its ranks.

Cuautla Mayor Jesús Corona Damián was arrested Saturday, Security Minister Omar García Harfuch wrote in a post on social media platform X. An arrest warrant had been issued by the general prosecutor’s office on May 20.

Corona was on the run in recent days, after the security ministry announced in May the arrests of other top officials in Morelos State. The moves are part of a broader operation under President Claudia Sheinbaum, who took office in 2024 with an anti-corruption message, to nab dozens of politicians taking part in extortion scams and with alleged ties to broader crime rackets.

“With this operation, more than 85 officials and former officials have been detained, including seven mayors currently in office,” García Harfuch said on X. “The government of Mexico maintains a policy of zero impunity regarding any links between authorities and criminal groups.”

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Remember last weekend when we outlined how the sudden sense of urgency from Europe toward a trade agreement with Mexico? that agreement had little to do with purchasing row crops from Mexico, and everything to do with what Europe needs as access to the United States {Go Deep}.

The language being used by the United States trade office is specific. [SEE HERE] The first bilateral round of negotiations between the United States and Mexico for the USMCA free trade agreement has concluded. (Emphasis mine)

PRESS RELEASE – “MEXICO CITY — “Today, the United States and Mexico concluded the first bilateral round related to the Joint Review of the United States-Mexico-Canada Agreement (USMCA).

The United States concluded discussions with the goals of reducing the trade deficit with Mexico and strengthening American supply chains. During this first round, negotiators discussed priority issues related to automotive rules of origin, steel and aluminum, and economic security.

The United States and Mexico recognize the importance of advancing cooperation to enhance regulatory compatibility to strengthen sectors, including medical devices, pharmaceuticals, cosmetic products, and others.

We will continue advancing these discussions on June 16-17 in Washington, D.C., in addition to agriculture and a level playing field. The third round will be held during the week of July 20 in Mexico City.

The United States continues to emphasize the importance of ensuring the Agreement benefits U.S. manufacturers, farmers, ranchers, workers, service suppliers, and businesses of all sizes, and of addressing free-riding from third countries.” (source)

Currently, European automakers have billions invested in Mexican auto plants.  Much of the component material for those vehicles comes from Europe for assembly in Mexico.  That was the primary focus of the Europeans in their trade agreement with Mexico.

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The technical definition of a “recession” is two consecutive quarters of negative GDP growth. The 4th quarter of 2025 and 1st quarter of 2026 have identified exactly that problem, negative GDP growth in Canada. [-1% and -0.1% respectively] The pretending is fierce, and again CTH warns everyone to be careful about exposure to the Canadian sector in their investment holdings.

As customary, whenever the economic policy of a political leftist delivers a bad outcome, the media contort themselves in order to avoid defining the situation accurately.  Instead, the financial media project -without merit- that the current situation is more positive.  Unfortunately, the data doesn’t provide much room to arbitrarily change the definitions.

Keep in mind this announcement today comes on the heels of the Bank of Canada warning that a “cascading series of events could cause a sharp loss of investor confidence and lead to a spike in demand for liquidity or rapid asset sales.”  This is a particularly pertinent phrase given one of the common reasons being attributed to the negative GDP, increased import values – specifically Canadians purchasing gold.

Several financial outlets have noted the increase in the value of Canadian imports, a negative in the GDP calculation, is being driven by Canadians (institutions and individuals) purchasing gold as a hedge.  The Canadians are buying gold as a hedge against both inflation and currency devaluation.

This activity puts additional context onto the statements from the Bank of Canada, who would likely have advanced notice of this issue.  Hence, the Bank of Canada also saying, “In normal times, hedge fund activity helps keep markets running smoothly. But if conditions become strained, this activity could amplify stress and disrupt core funding markets.”  The Wall Street Journal:

WSJ – OTTAWA — Canada’s economy unexpectedly shrank for a second consecutive quarter as activity stalled at the start of the year, raising the likelihood the country dipped into a recession.

Gross domestic product, a broad measure of goods and services produced across Canada, edged down 0.1% in seasonally adjusted annualized terms in the January-to-March period, Statistics Canada said Friday.

The economy also contracted a larger-than-previously-estimated 1% in the final quarter of last year. Back-to-back quarterly declines typically define a technical recession.

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…”A cascading series of events could cause a sharp loss of investor confidence and lead to a spike in demand for liquidity or rapid asset sales”…

That’s a diplomatic way for the Bank of Canada to say the current financial situation in Canada is tenuously at risk, if the economic relationship with the United States severs as a result USMCA points of conflict becoming irreconcilable.  An interesting statement against the backdrop of Prime Minister Mark Carney having just visited New York making a pitch to American investors {citation}.

The Bank of Canada released their 2026 Financial Stability Report {see pdf here}, and Senior Deputy Governor Carolyn Rogers and Deputy Governor Toni Gravelle delivered remarks today about the analysis.  I’ve prompted the video below to the point of interest, as well as the transcript for the portion being highlighted [7:12 to 9:15].  WATCH:

[Transcript]  – […] “However, vulnerabilities have increased in some parts of the system. Stock and corporate debt valuations have risen and are high relative to historical norms. This makes markets more vulnerable to a sharp correction.

The issuance of global sovereign debt is also rising, and hedge funds are playing a bigger role in buying that debt, often using borrowed money. In normal times, hedge fund activity helps keep markets running smoothly. But if conditions become strained, this activity could amplify stress and disrupt core funding markets.

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I never quite understood just how controlled the information flow is inside Canada until about two years ago when we began closely monitoring Canadian positioning for the upcoming USMCA (CUSMA) renegotiation/cancellation.  It quickly became obvious the majority of Canadians have no idea why it is almost a certainty the U.S. would exit the trilateral arrangement and position for a bilateral free trade agreement.

In the two years that have passed, now we see a few Canadians starting to realize the core issues of trade conflict that make any FTA between the U.S. and Canada almost impossible.  The largest issue centers around Canada’s net-zero carbon legislation that now completely disconnects them from aligned North American energy policy between the U.S. and Mexico.

A trilateral agreement requires core alignment on industrial manufacturing, and that requires similar abilities & similar energy policy.  You cannot make steel, iron and aluminum without coal and gas.  You need joules for heavy industrial manufacturing that cannot be achieved without exploiting coal, gas or oil (carbon materials).  Canada’s energy policy no longer aligns with industrial manufacturing. This core issue cannot be resolved at the current level of energy policy in Canada.

There are other issues like Canadian trade deals with China, non-tariff barriers, legislated rules over intellectual property and other points of significant friction that make alignment within North America challenging. However, the energy component makes compatible trade impossible.

In the interview below, U.S. Ambassador to Canada Pete Hoekstra appears on a podcast with David Leis, for a blunt conversation about trade, pipelines, critical minerals, China, and why the U.S. is growing frustrated with Canada’s direction.  At the end Hoekstra even explains why he is doing Canadian podcasts; because information within Canada is restricted by the government control of media – and that explains why most Canadians are clueless about the issues.

I’ve prompted the interview to the point that gets into the details. If you are interested to be fully understanding of what is coming, this is a solid reference point. Also, if you have financial investments associated with Canada or any system that is connected to the economic relationship between the U.S. and Canada, you need to watch this interview to proactively defend your financial interests.  VIDEO PROMPTED:

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Watch it or listen to this roughly 30 minutes (prompted) as you cook, drive or go about your day. But listen to it and see the disconnect between Canada and the USA as outlined.  Things are going to get much worse in this relationship as the finality of it all suddenly starts to sink in north of the border with the average Canadian.

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It’s not Mexico that needs a trade deal with Europe, it’s the opposite.

For almost two decades Europe has been investing heavily inside Mexico, particularly noted in the auto industry, as they positioned themselves to take advantage of NAFTA and later the USMCA as an entry to the U.S. market.

European auto companies spent billions on assembly plants in Mexico, where they could ship EU manufactured component goods to be assembled into NAFTA/USMCA compliant vehicles.  As President Trump and USTR Greer begin focusing on eliminating the USMCA trade agreement in favor of two bilateral deals (U.S-Canada and U.S-Mexico), Europe now needs to protect prior investment.

The prior Mexico-EU trade agreement has existed since 2000 (NAFTA timeframe).  In 2025 they agreed to a revised Free Trade Agreement (FTA) and finalized the terms and conditions yesterday.

MEXICO CITY, May 22 (Reuters) – Mexico and the European Union signed a long-stalled free trade agreement on Friday as they seek to decrease dependence on the U.S. and partially insulate themselves from U.S. President Donald Trump’s tariffs.

The accord, which they reached broad agreement on in 2025 but have delayed signing, expands a Mexico-EU trade accord from 2000, which covered only industrial goods. The new pact adds services, government procurement, digital trade, investment and farm produce.

Mexico’s President Claudia Sheinbaum, European Commission President Ursula von der Leyen and European Council President Antonio Costa are to sign the deal in Mexico City in their first summit in over a decade.

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Somewhere along the path to the inevitable dissolution of the USMCA trilateral trade agreement, reality will set in for Canada.  Until then, denial is the preferred course of action from Prime Minister Mark Carney.  Not since COVID-19 have we witnessed an intellectual disassociation happening over such a large sector of a population.

According to the latest media reports, Prime Minister Mark Carney is set to announce a new Canadian Trade Advisory Council that will strategize the best moves within each sector of the Canadian economy to deal with the United States USMCA renegotiations.  Even at this latest date, the Canadian government is still under the belief they can negotiate themselves into a position where their status within the USMCA (CUSMA) will be retained.

Simultaneous to this announcement, the one best hope the Canadians have relied upon is also evaporating.  However, before discussing that aspect, let’s first look at the advisory council.

CANADA – Prime Minister Mark Carney is expected to unveil a new advisory council focused on Canada-US trade relations as Ottawa attempts to salvage Canadian-US trade amidst Donald Trump’s aggressive tariffs. According to reports, the council will bring together major business leaders, labour representatives and former politicians to advise the federal government ahead of the scheduled review of the Canada-United States-Mexico Agreement (CUSMA).

[…] While the entire list of figures present on the council has yet to be announced, the Government of Canada first announced the advisory committee in April 2026, and released a partial list of members. Members reportedly include Conservative leader Erin O’Toole, former Quebec premier Jean Charest, and other representatives from sectors such as energy, manufacturing and forestry. There are also multiple high-level Canadian executives present on the list released by the Prime Minister’s office on April 21. The committee will be chaired by Dominic LeBlanc, who currently serves as minister responsible for Canada-U.S. trade and intergovernmental affairs. According to the Prime Minister’s Office, the council’s role will be to provide strategic advice and industry expertise as Canada prepares for negotiations under the umbrella of Donald Trump’s renewed tariff threats.

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It is always a good idea to make note of things, put them into referenceable context, and then later tell the full story from background details that will surprise everyone else.

Two significant events have taken place within the last few days against the backdrop of Sinaloa government officials beginning to turn themselves in to U.S. federal authorities.

The first event is the Mexican government freezing the bank accounts and financial assets of those who have been named in the U.S. federal indictment.  Mexican President Claudia Sheinbaum says the seizures are out of her control, merely a process that takes place, yet the motives for her defensive protestations are more than a little transparent.

MEXICO – On May 18, President Claudia Sheinbaum confirmed that Mexico’s Financial Intelligence Unit froze the accounts of Sinaloa Governor Rubén Rocha Moya, his children, and senior aides. The action followed U.S. federal charges alleging they aided the Sinaloa Cartel through drug trafficking, weapons possession, and accepting multimillion-dollar bribes. Sheinbaum stressed the freeze was a technical, preventive step triggered by U.S. arrest warrants, not a domestic criminal finding.

The freezes come amid heightened U.S.-Mexico tensions over cartel corruption claims that have already strained security cooperation and political trust. Washington has broadened its anti-cartel strategy to target politicians accused of enabling organized crime, while Mexico remains sensitive to perceived foreign interference. Analysts warn the case could further erode institutional trust and complicate cross-border collaboration on security, trade, and migration.  (more)

The second event happened very quietly.

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Remarkably, many news articles are citing confusion in trying to understand why U.S. Undersecretary of War, Elbridge Colby, announced the suspension of U.S. participation in the Permanent Joint Board on Defense with Canada. However, the announcement comes immediately after his meeting with U.S. ambassador to Canada, Pete Hoekstra, at the Pentagon and the comment, “we’re working closely to ensure every NATO partner, including Canada, reaches the Hague Summit’s 3.5% GDP defense spending target, a vital investment for North American and Arctic defense.”

The issue, as outlined by Undersecretary Colby, centers around Prime Minister Mark Carney’s recent statements in antagonism toward the U.S., a public announcement that Canada would not be purchasing U.S. military equipment and the biggest issue of all, that Canada is not living up to the NATO defense spending agreements.

It was in December of 2024, immediately after the November election where Donald Trump won, when then Prime Minister Justin Trudeau flew to Mar-a-Lago for dinner with President Trump and told him there’s no way that Canada could meet their NATO obligations.  Canada had relied on the USA to provide all national defense and was 16th in defense spending at 1.1% of GDP. {CITATION}

The issue of NATO compliance was part of a larger discussion around trade imbalances, non-tariff barriers, intellectual property conflicts and legislative hurdles that Canada used as a crutch to retain economic benefit without reciprocity.

Trudeau was arguing that Canada could not change all the points of conflict, drop their non-tariff barriers, comply with NATO demands and simultaneously get into total alignment with the USMCA trade compact (CUSMA to Canada), because their climate policies did not support or match the heavy industrial processing capabilities of both the United States and Mexico.

This triggered President Trump to respond with the 51st state, notation.  Essentially, if you cannot be a partner with equal capabilities; and if you need to retain structural economic dependency; then Canada should just become a 51st state of the USA.

Since that time, things went downhill quickly.  Instead of trying to find ways to eliminate points of conflict, Prime Minister Mark Carney began a campaign of aggressive anti-Trump narrative distribution in order to maximize domestic political benefits.

President Trump then turned toward Mexico and began working with USTR Jamieson Greer to construct what is essentially a bilateral trade agreement between the U.S. and Mexico.

The administration began ignoring Canada, planning instead to announce the upcoming dissolution of the USMCA and then force Canada to negotiate a bilateral.  A jilted Canada then began doubling and tripling down on the anti-Trumpism, with Carney saying the era of trade between the USA and Canada is over.

Carney then reached out to Europe and China for trade replacement value and began making announcements about no longer purchasing U.S. manufactured fighter jets and military hardware.

U.S. Undersecretary of War, Elbridge Colby meets with U.S. Ambassador to Canada, Pete Hoekstra, and obviously the NATO stuff is just the straw that ended the U.S. participation in the Permanent Joint Board on Defense with Canada.  Not a complicated timeline to figure out.

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During a White House event to celebrate Moms, President Trump introduced several prominent Moms in and out of government and celebrated their achievements.  As he often does, President Trump also delivered unscripted remarks to accompany the themed script of the event.

I’m highlighting one specific impromptu, off the cuff remark that deserves a little attention.  I’m certain somebody around Mexican President Claudia Sheinbaum will also bring it to her attention.  The moment happens at 35:51 of the video below. Watch (prompted):

…”drugs coming in by sea are down 97% and now we’ve started the land force, which is much easier.  And you’ll hear some complaints from some people in, like, representatives from Mexico and other places, but if they’re not going to do the job, we’re going to do the job and they understand that.”… 

Last week the DOJ indicted Mexican Governor Ruben Rocha Moya along with nine current and former Mexican officials for participating “in a corrupt and violent drug trafficking conspiracy with the Cartel to import massive amounts of fentanyl, heroin, cocaine, and methamphetamine from Mexico into the United States.” {GO DEEP}

Keep in mind, while the U.S. media are not reporting on the issue; however, every ground report indicates that indicted Sinaloa Cartel Governor Ruben Rocha is being protected in an undisclosed location by the Mexican National Guard.  Essentially, the Mexican military is protecting an indicted drug trafficker and politician in Mexico, while avoiding extradition to the U.S. That’s further context for President Trump’s remarks.

MEXICO CITY, May 6 (Reuters) – A U.S. indictment announced last week accusing several Mexican politicians, including the governor of Sinaloa, of having drug cartel ties is triggering a rift in the ruling Morena party as factions jostle ​over how to respond, posing a significant challenge for President Claudia Sheinbaum.

Publicly, Sheinbaum has denounced U.S. interference and said the evidence Mexico has seen so ‌far is not sufficient to arrest and extradite the 10 current and former Mexican officials accused by the U.S. Department of Justice of colluding with the Sinaloa Cartel to traffic drugs into the United States.

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