Let’s discuss the evidence.
Understanding the Setup
The US has two negotiators, Commerce Secretary Howard Lutnick, who oversees the so-called Section 232 sectoral tariffs, and US Trade Representative Jamieson Greer.
The consensus opinion was that a deal was close. Carney thought a deal was close. Trump announced a deal, arguably a huge red flag.
There was a last minute dispute over tariffs on light trucks. It’s possible this was a simple misunderstanding. Each side may have had a different understanding of autos.
The killer was two last minute demands by someone on the US side. The first pertained to Canada’s ability to make deals with other countries. The US wanted restrictions.
The second last minute demand by the US sought to curtail the use of French, one of Canada’s two official languages. This dispute pertains to digital services and US-based streaming services and levels of French-language content.
Canada’s ambassador to the US, Mark Wiseman, likened the negotiations to a handshake deal to buy a house — only for the prospective buyer to learn appliances weren’t included, the furnace had no warranty and neither the garage nor yard is on the same property
Point three in and of itself was a sensitive situation. Then out of the blue came demands four and five.
Point four alone was sufficient for Canada to walk away. No nation would agree to that.
Lutnick and Greer both had to understand that as well. So, what’s the point of making those last minute demands unless it was to purposely kill the deal?
Lutnick on When America Was Great
Lutnick Lies About Unions
Lutnick Lies About Epstein
One-Sided Respect
LutnIck’s External Revenue Claim
Lutnick Is a Liar and a Con Man
That Lutnick is a liar and a con man does not prove he purposely sabotaged the deal.
But Occam’s razor (the simplest explanation is the one that’s most likely) suggests that is what happened.
The Dumbest Trade War Revisited
The Wall Street Journal comments on The Dumbest Trade War Revisited
President Trump took exception last year when we called his tariffs against Canada and Mexico the dumbest trade war in history. It got dumber this weekend as Mr. Trump escalated with another round of border taxes on Canadian imports, a mere 10 weeks before midterm elections.
Mr. Trump issued his latest tariff threat against Canada last month under Section 338 of the 1930 Tariff Act. The law lets the President impose tariffs up to 50% on countries that discriminate against “commerce of the United States, directly or indirectly” in relation to foreign countries. No previous President has used this power.
Mr. Trump set a deadline of midnight on Friday for Canada to reach a deal to avert 50% tariffs on $20 billion of goods. The countries were close to an agreement until, poof, the cease-fire blew up at the last minute with each side blaming the other.
To justify his new tariffs, Mr. Trump said Canada discriminated against the U.S. by retaliating against his national-security tariffs on autos. He also claimed that Canadian provinces had restricted sales of U.S. alcoholic beverages in response to his “emergency” tariffs last year. Yet U.S. distillers begged Mr. Trump to hold off on his Section 338 tariffs. They know the longer Canada locks out American booze, the tougher it will be to regain market share.
The President also cited longstanding grievances over how Canada treats U.S. dairy. Press reports say the Trump team raised other issues during recent negotiations, including Canada’s treatment of U.S. tech companies and digital taxes. Most of these issues could have been addressed as part of a renegotiation of the U.S.-Mexico-Canada Agreement.
But Mr. Trump doesn’t want to update the deal. He wants to rewrite it unilaterally. As Mr. Carney noted Saturday, the President has contrived an array of pretexts—from fentanyl trafficking to trade deficits—to bludgeon Canada with tariffs.
Mr. Trump’s complaint about the U.S. trade deficit with Canada is particularly ironic since the latter owes entirely to imports of heavy crude oil that is especially well-suited for U.S. refineries. Exclude Canadian oil, and the U.S. would have a trade surplus. But U.S. refineries would also operate at lower capacity.
In any event, last week the two sides were close to an agreement that would reduce the U.S. auto tariffs on Canada to 15% (the same rate as South Korea and Japan) from 25%, and on steel and aluminum to 25% from 50%. These tariff reductions would help U.S. manufacturers, which have integrated cross-border supply chains.
Mr. Carney said Saturday that a major reason the deal blew up is that the Trump team refused to ease tariffs on heavy and medium duty trucks, including those made at Ford’s plant in Ontario. Why is Mr. Trump punishing Ford, America’s largest auto producer?
Mr. Trump’s latest round of border taxes will hit an array of consumer goods, construction materials and manufacturing components. Republicans are already getting pounded on the campaign trail over his tariffs and inflation. One reason for Mr. Trump’s frigid approval rating is that voters believe Mr. Trump is waging blunderbuss wars without a strategy, and on trade they’re right.
The Journal is correct on this one, but the article misses the absurd last minute demands by either Greer or Lutnick.
Related Posts
March 12, 2025: Lutnick Says Tariffs Can Eliminate the IRS and Balance the Budget
Lutnick: “We’re going to make the External Revenue Service replace the Internal Revenue Service.”
To balance the budget with tariffs, the administration would need to bring in $7 trillion. To replace individual and corporate income taxes, tariffs would need to bring in $3.1 trillion.
Team Trump proposes $918 billion in “reciprocal tariffs” to make the trade deficit go away.
But to balance the budget and eliminate personal income taxes, Trump would need to collect $7 trillion in tariffs on a net trade deficit of $918 billion.
I would love to hear a detailed explanation of exactly how that works.
August 22, 2026: Hypocrite Trump Eliminates Beef Tariffs But Only Through the Election
The price of beef is getting to Trump (and everyone else). But ranchers are very upset by the move.
Fact Check on Trump’s Claim “Canada Ripped Us Off”
In February, I did a Fact Check on Trump’s Claim “Canada Ripped Us Off”. What’s the Real Story?
For 2025, the total balance with Canada was -53 billion. But the oil balance was -84 billion. Excluding oil, the US has a goods trade surplus with Canada of 31 billion.
Q: Why exclude oil?
A: Because the US needs Canadian oil and gets it at bargain prices too!Energy Synopsis
The US gets Canadian oil at a 15 percent discount, and it’s oil that our refineries are built to handle.
The US exports West Texas Intermediate, a higher grade of oil, at a higher price.
Excluding oil, the US has a trade surplus with Canada for 18 years.
Q: What About Services?
A:The US runs a constant services trade surplus with most of the world.
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