MEXICO CITY (AP) — Canadian Prime Minister Mark Carney and President Claudia Sheinbaum promised Thursday to strengthen trade relations in the face of U.S. tariff threats and pushed to keep the most important free trade agreement in the Western Hemisphere alive in the lead-up to negotiations next year.

Their meeting came during Carney’s first visit to Mexico as Canada’s leader and at a moment of economic tension for the region. The two leaders shook hands and strode side-by-side into the presidential palace in Mexico City earlier in the day. Despite not being present, U.S. President Donald Trump and wider economic uncertainty were front and center in the visit.

“North America is the economic envy of the world, is the most competitive economic region of the world, and part of the reason for that is the cooperation between Canada and Mexico,” Carney said in a press conference following the meeting. “We complement the United States. We make them stronger. We are all stronger together.”

Canada and Mexico strengthen trade at a time of uncertainty

Key to Carney and Sheinbaum’s meeting was the United States-Mexico-Canada trade pact, or USMCA, which is up for review in 2026.

Decades of free trade among the three nations has inextricably intertwined their economies: More than 75% of Canada’s exports and more than 80% of Mexico’s go to the U.S.

Trump’s ongoing and constantly evolving trade threats have put the countries’ political and business leaders on edge, as many scramble for more stable trade alternatives.

“Trump looms over this visit. Mexico and Canada now share a common threat from the U.S,” said Nelson Wiseman, professor emeritus at the University of Toronto.

On Thursday, Carney said he expects “much greater amounts of trade, much greater amounts of investment” between the Mexico and Canada. Sheinbaum said the two countries had agreed to a plan that what would “bring a new era of further strengthening economic ties” between the two nations.

Sheinbaum has said they want to increase bilateral trade in different sectors through the free-trade agreement and do so through maritime routes — which would avoid those goods having to pass through the United States.

Seeking improved relations

Carney was also looking to improve relations with Mexico during his two-day visit after some of Canada’s provincial premiers talked last year about cutting Mexico out of any new free trade deal with the U.S.

Trump lumped Canada in with Mexico on fentanyl smuggling and promised sweeping tariffs on both countries. Ontario Premier Doug Ford said then that Trump comparing Canada to the Mexico was “the most insulting thing I’ve ever heard from our friends and closet allies, the United States of America.”

Canadian Sen. Peter Boehm, who represented the Canadian government when Sheinbaum was sworn in as Mexico’s president last year, said the comments by the premiers, which he deemed out of their lane, upset the Mexicans.

“The Mexicans are particularly sensitive on these matters and there was concern about that, no doubt,” Boehm, who has been pushing closer relations between the two governments, said.

He said relations recently improved, noting Mexico appreciated Carney inviting Sheinbaum to the G7 summit in Alberta in June.

On Thursday, the two leaders promised new rounds of bilateral meetings in the coming months, and greater collaboration on security issues, agriculture, energy, finance, health, the environment and more.

“At this hinge moment. Canada is deepening our relationships with our long-standing partners,” Carney said. “Mexico is central to those missions.”

Mexico is Canada’s third-largest trading partner after the U.S. and China. Canada was Mexico’s fifth-largest trading partner in 2024. But trade with the U.S. remains paramount for both countries and preserving the free trade pact will be critical.

Trump looms over visit

Mexico and Canada have had different approaches to manage the negotiations with Trump’s administration but both countries want to increase bilateral commerce within the North American treaty.

Sheinbaum said the countries are already setting up teams and reviewing the agreement with the hopes of keeping trilateral free trade in place.

“Their priority is to strategize on how to deal with Trump and the coming renegotiation of the USMCA. Carney and Sheinbaum now recognize that tag-teaming Trump may be more effective than competing for separate deals with Trump, although they are still angling for them,” said Wiseman, the professor.

That trade agreement has largely shielded the vast majority of Mexican and Canadian goods from the punishing duties. Canadian and Mexican companies can claim preferential treatment under the USMCA.

But Trump has some sector-specific tariffs, known as 232 tariffs, that are having an impact. There is a 50% tariff on steel and aluminum imports. Sheinbaum noted that the lack of tariffs on many goods was a sign of the economic ties between the countries, but noted she hoped to offset especially steel tariffs.

Despite that, Carney and Sheinbaum highlighted the importance of the U.S. and the importance of unity between the three countries. They dodged questions about provocations by Trump and any tensions with the American leader, threading the word “optimism” throughout the press conference.

“USMCA is a testament to if Mexico, Canada and the United States work together, we can create prosperity, face global challenges successfully and position ourselves as the most dynamic region in the world,” Sheinbaum said.

Gillies reported from Toronto. María Verza contributed to this report from Mexico City.