U.S. President-elect Donald Trump has announced his cabinet pick to fulfill his campaign promise to impose broad tariffs, and although the ramifications for Canada remain to be seen, here is what the appointment could indicate.
Trump announced on Nov. 19 that Howard Lutnick will become secretary of commerce in his administration acceding to the White House in early 2025.
Trump said Lutnick, CEO of financial services firm Cantor Fitzgerald, will be leading the “Tariff and Trade agenda” and that he will also have direct responsibility over the Office of the United States Trade Representative. Lutnick is also serving as co-chair of Trump’s transition team.
The dual roles of commerce secretary and trade office authority suggest Lutnick will have increased influence over trade measures. While Lutnick has advocated for the imposition of tariffs during the presidential campaign, his portrayal of the measure has differed from Trump’s.
Trump told Bloomberg News in October tariffs are “the most beautiful word in the dictionary” and has promised to impose broad 10 percent tariffs on U.S. imports, 60 percent tariffs on China-made goods, and 100 percent on countries that try to get off the U.S. dollar.
Lutnick has also said he supports imposing tariffs, but has suggested they could be used as a trade negotiating tactic.
“I think we should put tariffs on stuff we make and not put tariffs on stuff we don’t make, it’s pretty simple. And of course, it’s a bargaining chip,” he said during a Sept. 16 interview with CNBC. He said by threatening tariffs on certain goods like vehicles, other countries will react by taking down their trade barriers. “Of course they’re going to come down,” he said. “This is just negotiating.”
At the same time, Lutnick said, the U.S. should use tariffs to protect American workers. He also mentioned a bygone era when the U.S. economy was booming due to tariffs.
During a speech at a Trump rally at Madison Square Garden on Oct. 27, Lutnick said America’s economy was “rocking” in the early 1900s when the government had no income tax and relied on tariffs for up to
95 percent of government revenue. He said these tariffs were taken off following World War II when the country “felt we had a duty to rebuild the rest of the world,” but suggested this should have ended by around the 1980s. “We’re letting the rest of the world eat our lunch,” he said.
Lutnick also said during an Oct. 28 podcast interview with Anthony Pompliano that many people in Michigan live in “despair” because auto manufacturing jobs have been moved to Mexico and drugs have flooded across the border. “We’ve got to fix it. And that’s Trump’s key mission, is, ‘let’s take care of the American workers, let’s take care of America,’” he said.
Upcoming Negotiations
During Trump’s previous term in office from 2016 to 2020, he
imposed tariffs of 25 percent on Canadian steel products and 10 percent on Canadian aluminum imports in 2018, a move that led Canada to retaliate in a similar manner. The tariffs were lifted in 2019.
The Trump administration also renegotiated the
North American Free Trade Agreement with a new deal that advanced protections for American workers, manufacturers, and farmers. This included stronger rules of origin for the automotive industry, requiring 75 percent of auto content to come from North America, up from the previous 62.5 percent. This agreement also incentivized the use of high-wage manufacturing labour, a move that was expected to boost production in the United States and Canada, which had lost jobs to Mexico for years.
As part of the new Canada-U.S.-Mexico Agreement (CUSMA), Canada was also required to open up its markets more to U.S. dairy farmers and provide new tariff rate quotas exclusively for the United States.
Trump has said he will formally notify Mexico and Canada of his intent to invoke the six-year renegotiation provisions of CUSMA in 2026.
While Trump has not said exactly what he would expect from a CUSMA renegotiation, the U.S. has
expressed displeasure with Canada’s new Digital Services Tax, with United States Trade Representative Katherine Tai
saying the country would use every tool available to fight it.
Shortly after Trump’s election victory, Prime Minister Justin Trudeau resurrected a cabinet committee focusing on Canada-U.S. relations, which Deputy Prime Minister Chrystia Freeland said was done in
response to the “urgent issue” of Trump’s incoming presidency. The deputy prime minister added that the committee’s first meeting revolved around the Canada-U.S. trade relationship and border.
In recent weeks, there have also been discussions among Canadian politicians about negotiating a bilateral trade deal with the United States that would leave out Mexico, due to concerns China is using the country for trade access.
Freeland has said members of Biden’s and advisers of Trump have expressed “grave” concerns about Mexico becoming a “back door” to Chinese goods.
Ontario Premier Doug Ford has also said that all provinces are
on board with the idea of a bilateral deal with the United States. Ford, who is chair of the Council of the Federation, said “all the premiers“ are in agreement that Canadian and American jobs have been lost due to Mexico ”bringing in cheap Chinese parts, slapping made-in-Mexico stickers on, shipping it up through the U.S. and Canada.”
During the
recent G20 Summit in Brazil, Prime Minister Justin Trudeau said he discussed the issue with Mexican President Claudia Sheinbaum, saying following the meeting that he “pledged that we’re going to be there to work to ensure that North American trade continues to stay strong and beneficial to all our citizens.”
