U.S. Secretary of Commerce Howard Lutnick at the White House on Sept. 30. The U.S has placed a 25-per-cent tariff on Canadian-made cars.Ken Cedeno/Reuters
North America is not going back to the free-trade regime that existed for decades, and the United States is no longer interested in buying Canadian-made cars, U.S. Commerce Secretary Howard Lutnick told a Toronto audience on Wednesday.
In a blunt virtual address to hundreds of Canadian bankers and business leaders at the BMO Eurasia U.S.-Canada Summit, Mr. Lutnick said that U.S. President Donald Trump wants America to assemble all of its own automobiles, although it will still look to import parts, according to sources who attended the talk on Wednesday.
Mr. Lutnick said that the new administration is putting the United States first in all things, but that Canada can still be “second” and benefit from its proximity to the massive U.S. market in a range of industries. Mr. Lutnick’s address was closed to media, but his comments were confirmed by five sources who spoke to The Globe and Mail.
The remarks, delivered a day after Prime Minister Mark Carney returned from meeting with Mr. Trump in Washington for the second time without a trade deal in hand, highlight the difficult road ahead for key Canadian industries in a newly protectionist North America.
Mr. Carney echoed Mr. Lutnick’s comments in his own address to the BMO-Eurasia conference later in the day. He said the “remorseless progress” of integrating the North American economy is over, and that “nostalgia isn’t a strategy.”
Opinion: It’s humiliating to kowtow to Trump. But what choice does Carney have?
The United States-Mexico-Canada free-trade pact, which will be renegotiated next year, remains the best trade deal any country has with the United States, Mr. Carney said. But he said there will likely be bilateral deals that get made alongside the existing trilateral agreement for key sectors, and that Canada was thinking hard about where to remain integrated with the U.S. economy, and where to seek new partners.
After their meeting on Tuesday, the two leaders agreed to quickly try to reach deals on several sectors, including steel and aluminum, which have both been hit with 50-per-cent U.S. tariffs. The leaders also agreed to look at energy deals, but made no commitments to seeking out an arrangement for the auto sector.
The U.S has placed a 25-per-cent tariff on Canadian-made cars with a carve-out for the value of the vehicle made from U.S. parts. Last year, around 90 per cent of the 1.3 million vehicles manufactured in Canada were exported to the U.S.
The auto sector was a major focus for Mr. Trump during his Oval Office meeting with Mr. Carney on Tuesday, where he repeatedly said the two countries have “natural conflict” when it comes to auto production.
“The problem we have is that they want a car company and I want a car company. They want steel and we want steel,” Mr. Trump said. He added that Canadian and U.S. trade negotiators were “working on formulas” related to the automobile trade, but did not elaborate.
Prime Minister Mark Carney told Mr. Trump that Canada would make an estimated $1-trillion worth of investments in the United States in the next five years, if Canada gets the ‘deal we expect to get.’
Mr. Carney acknowledged on Wednesday the different views on the auto sector.
“For the U.S. to be fully competitive, to be globally competitive … in auto, you need USMCA,” Mr. Carney said, referring to the Canadian position. “Not everyone shares that view at this time. And so that’s a real discussion.”
Ontario Premier Doug Ford, who also spoke at the Toronto conference, appeared incensed by Mr. Lutnick’s and Mr. Trump’s comments about the Canadian auto sector, which is concentrated in his province.
“You aren’t going to annihilate our steel sector. You aren’t going to annihilate manufacturing in Ontario. And you sure the heck aren’t going to annihilate the auto sector,” Mr. Ford said, urging Ottawa to hit back against the U.S. “twice as hard” if it can’t secure relief for the auto sector or other industries.
He said that Ontario would not put U.S. alcohol back on Liquor Control Board of Ontario shelves “until we get a deal,” and threatened to cut off critical minerals exports to the U.S. if Mr. Trump persists in trying to cripple the Canadian auto sector.
Ontario Premier Doug Ford says if Prime Minister Mark Carney can’t reach a deal to end the U.S. tariffs, Ottawa should start hitting back hard with retaliatory measures.
The Canadian Press
Brian Kingston, chief executive officer of the Canadian Vehicle Manufacturers’ Association, said he viewed Mr. Trump’s and Mr. Lutnick’s comments on Canada’s auto sector as an aggressive negotiating position.
“The fact is this is a highly integrated market and you can’t disentangle it. There is no world in which you bring manufacturing back into America and the industry succeeds in America,” he said.
“It’s frankly impossible to do, and the cost would be so phenomenal that the damage to the automotive industry would be untenable. So I see it as a stance, not a feasible outcome.”
Alberta Premier Danielle Smith took a more positive view of the meeting between Mr. Carney and Mr. Trump, lauding the Prime Minister’s more conciliatory tone and his focus on the U.S.-Canada energy relationship.
“I think even the Prime Minister was framing yesterday as more of a social visit, trying to downplay expectations,” she said at the conference.
Opinion: Carney’s better off without a big Trump trade deal. Just ask the Europeans
She praised that approach: “We want them to have private dinners and conversations together. That is how deals get made with this particular President.”
The fact that Mr. Carney returned from Washington without a trade deal in hand drew withering criticism from his political opponents.
Conservative Leader Pierre Poilievre accused Mr. Carney of betraying Canadian workers by telling Mr. Trump on Tuesday that Canada would make US$1-trillion worth of investments in the U.S. in the next five years if Canada gets the deal it expects.
“The Prime Minister went pathetically to the White House to offer a trillion-dollar gift, bowing before the President in weakness,” Mr. Poilievre said during Question Period Wednesday. He asked where deals were on softwood lumber and autos.
Goldy Hyder, CEO of the Business Council of Canada, said in an interview on Wednesday that he didn’t think any sectoral deals would be announced before the end of the year: “We played the game of waiting. Well, waiting now means you’re actually behind the line.”
BMO CEO Darryl White said in an interview at the conference that he was feeling “net better” after the leaders’ latest meeting. But he said uncertainty remains about the future of the USMCA, and Canada needs to start planning for change.
“To assume that we’re just going to hit auto-renew on every agreement, I think, is not reading the room.”
With a report from James Bradshaw