Canada’s chief negotiator has pointed out that the U.S. commerce secretary was not at the table when trade talks broke down nearly two weeks ago.
Howard Lutnick has said that the tariff level on medium- and heavy-duty trucks was not discussed until 4 p.m. on Friday, August 21 , just before the Canadian side walked away from talks.
Janice Charette’s point was that the truck issue was discussed repeatedly by negotiators in the room, a place where the commerce secretary was noticeable by his absence.
It seems highly likely that Lutnick was trying to repeat the tactic that worked for him over the Gordie Howe bridge negotiations by pushing for more advantageous terms at the 11th hour — in this case, exempting trucks from the tariff reduction on passenger cars. It didn’t work this time.
But if Lutnick was not in the negotiation room, by his own account, he was with Donald Trump when the president thought he had reached a deal with Prime Minister Mark Carney.
Lutnick told CNBC on Wednesday that a deal was reached, prompting Trump to put out a social media post to that effect.
By the afternoon of Friday the 21st, Canada was adding “crazy ideas” to the mix, Lutnick said.
“I said to one of their ministers: ‘Are you actually trying to blow this up?’ His answer was: ‘I’m not allowed to say that’.”
Lutnick’s allegation is that the Canadians walked away for political reasons to do with the provincial election in Quebec and the independence referendum in Alberta.
For people who have clearly lost touch with morality, there is a curious sense of moral outrage among the senior figures of the Trump administration. They feel genuinely aggrieved that they were misled and disrespected by the Carney government.
That is, of course, their concern. But it should worry Canadians that their government’s account is at best ambiguous. The prime minister has told a version of the past that cannot be disproved by the available facts, but which places heavier emphasis on culture, language and sovereignty issues than the events may warrant.
The public still trusts the prime minister, but his reputation for candour was dented by his version of the Gordie Howe bridge-funding deal and it may take further hits as accounts of how the talks broke down continue to trickle out. Strategic ambiguity was his stock in trade as a bank governor trying not to show his hand on the direction of future interest rates. It is a linguistic approach less suited to politics.
This is not to suggest that Trump does not covet Canada and is not seeking to destroy its auto industry. Carney’s campaign slogan that the president is trying to break us so he can own us resonated because it is accurate.
But at the negotiating table, a deal was reached that would have withstood U.S. inquiries about the discoverability of French-language shows on Netflix and its interest in aligning future trade agreements. (As U.S. trade negotiator Jamieson Greer pointed out, the existing CUSMA agreement includes a provision which gives the U.S. influence over future deals with non-market players.)
The deal-breaker was autos, and Ontario Premier Doug Ford’s refusal to put American booze back on the shelves in his province if Canada signed on to a 15 per cent auto tariff. As one Canadian official told me : “We really pulled out because Ford was not on board.” Ford admitted as much appearing on ABC over the weekend, when he said negotiations stopped after he told Carney it was “a terrible deal for Canada.”
A senior industry figure suggested that Lutnick’s last-minute change on heavy-duty trucks was grasped by the federal government as a pretext for walking away.
The source suggested that the Carney government was willing to sign on to the deal because it has given up on the auto industry in Canada.
He said that Trump’s Jan. 1 delayed deadline for increasing auto tariffs to 50 per cent is to give Honda and Toyota time to announce expansion plans in the U.S., at the expense of Canadian production.
Another auto sector source said that is incorrect and Ottawa is still fighting to keep the industry in Canada. While the Japanese car giants are indeed planning to expand in the U.S., the source said both companies are committed to Canada, in part because of lower costs on certain things, such as employee health care.
Toyota is understood to be talking to the federal government about additional investments, the source said.
It is a tangled web, and it is hard to see how it resolves itself.
Tiff Macklem, the Bank of Canada governor, said on Wednesday that he does not expect the U.S. tariffs to have a large direct impact on the overall level of economic activity in Canada, given they cover just five per cent of exports south. But he noted an upside risk to the bank’s inflation forecast because of tariffs and persistently high oil prices.
No one typifies the debasement of American intelligent society to accommodate the unique stupidity of the Trump years like Scott Bessent, the treasury secretary. But he is probably right in saying the Canada-U.S. trade spat will only be resolved by direct talks between the president and the prime minister.
Those talks should probably wait until after the Alberta referendum asking about separation on Oct. 19.
By that time, the silent enemy of economic growth — inflation — may be imposing itself, and both sides may be more willing to provide more stable market access.
Any negotiated settlement would give way to an uneasy peace, given Trump’s tendency to renege on every deal he’s ever signed. But it would be an improvement on the circular firing squad the two countries have currently assembled.
National Post
