By David Ljunggren

OTTAWA (Reuters) – Canada wants Mexico to stay in a continental trade pact despite concerns about China possibly using it as a back door to flood the North American market, a source directly familiar with the matter said on Wednesday.

In recent days, Canadian officials have expressed concerns that Beijing could take advantage of the U.S.-Mexico-Canada trade pact to use Mexico as base for exporting cheap goods.

The Globe and Mail newspaper on Wednesday said Canada was weighing whether to cut Mexico out of the USMCA when it comes up for renegotiation in 2026.

But the source said that while Ottawa did have concerns about Mexico and China, the government’s starting point was that the USMCA was a good deal that Canada wanted to maintain.

The comments by the source – who requested anonymity because they were not authorised to speak to the media – were the most clear-cut Canadian expression of support for Mexico staying in the USMCA.

Canada, which sends 75% of all goods and services exports to the United States, could be badly hit if U.S. President-elect Donald Trump follows through on threats to impose blanket tariffs on all imports.

The United States and Canada this year both imposed tariffs on Chinese electric vehicles and steel, citing what they called Beijing’s deliberate policy of industrial overproduction.

Canadian Finance Minister Chrystia Freeland said on Tuesday that while the two partners were “not a back door to Chinese unfair traded goods … the same cannot be said of Mexico”.

Freeland said members of the current U.S. administration as well as Trump advisers had told her of their “very grave concerns” about China and Mexico.

“I believe those concerns are legitimate and Canada as a partner in the (USMCA) trading area shares those concerns,” she told reporters.

Deputy Mexican Foreign Trade Minister Luis Rosendo Gutierrez last month said Mexico would continue to prioritize the U.S. and Canada due to their strategic alliance through USMCA, but that did not imply Mexico would “break with China” or “deny them investments in Mexico.”

Any Trump move to impose a blanket tariff on imports could badly damage Ontario, the most populous of Canada’s 10 provinces and its industrial heartland.

Ontario premier Doug Ford, speaking after a call with his provincial counterparts, on Wednesday said they all backed his demand for a separate trade deal with the United States.

(Reporting by David Ljunggren; editing by Jonathan Oatis)