Mexican President Claudia Sheinbaum said on Wednesday that she had spoken with Canadian Prime Minister Mark Carney and that the two had agreed to strengthen trade collaboration, particularly in light of the tariffs from U.

President Trump has threatened to increase Mexico’s tariff rate to 30 percent starting Aug. 1, claiming the country hasn’t sufficiently tackled drug cartels.

The impact on effective tariff rates is expected to be moderate. BofA estimates these could rise to 4.2% for Canada and 6.9% for Mexico, up from 3.6% and 6.2%, respectively, due to the high share of USMCA-compliant goods in total trade flows.