You might remember recent reports outlining how the economy of Canada has slipped into a recession, posting two consecutive quarters with a negative GDP outcome. There are multiple reasons for this shrinkage, but the dominant factor is, well, quite frankly, Canadian politics and economic policy.
Meanwhile, in Mexico the opposite is happening. Mexico’s economic activity grew 1.2% in April from the prior month, the national statistics agency said, compared with a revised increase of 0.6% in March and beating a forecast of a 0.9% increase in a Reuters poll of analysts. {source}
It is not coincidental to see the Mexican economy performing well, while the Canadian economy is contracting. Despite their identical proximity to The United States, each nation is currently executing a fundamentally different set of economic policies.
The Canadian government has been exceptionally combative with the U.S.A, leading to friction, tariffs and economic back-and-forth measures between the two nations.
The Mexican government has expressly understood the nature of their dependency, admitted it, taken no action to diminish it, and purposefully set out to align itself with the interests of America.
Canada is combative. Mexico is collaborating.
It seems unlikely that the three nations can agree on major economic policies, as a trilateral partnership would need alignment in core areas like energy policy. Canada’s energy policy is fundamentally separate from those of the U.S. and Mexico, and this is an issue that can’t be resolved through a trade agreement alone.
A large part of Mexico’s economy relies on remittances from Mexican workers in the U.S. sending money back to their families. As long as the U.S. job market stays strong—and it’s only getting stronger in the industries where many Mexicans work—Mexico will continue to benefit from America’s economic growth.
