US Commerce Secretary Lutnick’s intervention in Canada talks draws praise and blame

WASHINGTON – US-Canada trade talks collapsed after last-minute pressure from Commerce Secretary Howard Lutnick, according to people familiar with the matter, leaving President Donald Trump to impose new tariffs and Canadian Prime Minister Mark Carney vowing retaliation.With the countries spiralling into a full-blown trade war, the spotlight is on Lutnick’s role in the last-minute talks.Lutnick viewed a framework deal as too generous to Canada and emerged as a champion for US metal producers who wanted to claw back concessions, the people said, speaking anonymously to discuss the negotiations.The Canadians blame him for moving the goalposts, some of the people said, while some business leaders credit Lutnick with derailing what they saw as a threat to US metals industries Trump has vowed to protect.Trump on Aug 18 announced a deal was in sight and delayed imposing 50 per cent tariffs on a range of Canadian goods.Battle lines, however, had formed as Lutnick and Peter Navarro, a pro-tariff trade hawk, criticised the framework from US Trade Representative Jamieson Greer’s weeks of talks with Canada.Lutnick’s 11th-hour intervention, taking him deeper into the talks, marked the latest example of how he’s functioned as a disruptive force inside Trump’s administration, often seizing on trade files where he senses the US can squeeze more leverage.A White House official disputed any notion Lutnick derailed the talks, insisting instead that they imploded after Canada made last-minute demands outside the agreed scope of discussions.The official added that while there was likely debate among US officials about the magnitude of tariff relief, Lutnick and Greer are aligned and working under Trump.While Lutnick was unhelpful and a major contributor to the breakdown of talks, his arrival wasn’t the cause, according to a Canadian official.The official said there were fundamental problems with the US objectives over the final days.USTR and the Commerce Department didn’t respond to requests for comment on the negotiations. The Canadian prime minister’s office also didn’t respond.Lutnick’s shifting public comments on auto and steel levies in 2025 fuelled market volatility.Deals he helped strike with Japan and South Korea – which saw the countries pledge hundreds of billions in investments in exchange for tariff relief – were initially met with caution and have continued to face questions, though some major projects have been announced.With Canada in particular, Lutnick has sometimes played the role of spoiler, including helping delay the planned opening of the Gordie Howe International Bridge, actions viewed in Canada as an attempted shakedown.US officials have blamed Canadian counterparts for the impasse.“The USTR did a fine job negotiating. Canada was very foolish not to take the deal,” Navarro said. “It won’t get better. Carney chose politics over the Canadian people.”After a conversation between Trump and Carney on Aug 18, the US president touted the prospect of resurrecting the Keystone XL oil pipeline and blessed the framework publicly, extending talks by three days to tie things up.However, tensions continued to mount.The US steel and aluminium sectors, typically staunch Trump allies, were outraged, saying they were caught off guard by a proposal that would weaken the tariff wall around their businesses and profit margins, the people said.The industries pressured Greer’s office. Some turned to Lutnick and allies in Congress for help.People familiar with the matter described a torrent of calls and frenzied meetings as they sought to warn the administration against the move. Domestic aluminium extruders, which shape raw aluminium into value-added goods, told administration officials and key lawmakers that widespread discounts on aluminium tariffs could destroy their profit margin.The Coalition for a Prosperous America emphasised that aluminium extruders are critical to support domestic production of the metal itself.Lutnick and Greer cut vastly different figures within the administration.Greer is seen as a restrained, details-focused trade lawyer at heart; Lutnick a more colourful, outspoken figure, like Trump.Both have key roles implementing Trump’s trade policy.While Greer led the talks with Canada, Lutnick’s Commerce portfolio includes the Section 232 tariffs targeting industrial sectors. While some people familiar downplayed the divide, saying the two officials are united under Trump, the dynamic led to something of a dual-track negotiation.Lutnick spoke directly with Carney repeatedly in the final days of negotiations even though Greer had been the Canadian delegation’s point person. Canadian ambassador to the US Mark Wiseman declined to discuss Lutnick’s impact on negotiations.“You’d have to ask the Americans how they were operating behind the scenes,” he said in an interview on Aug 23. “Our counterparty in our discussions was USTR.”Meanwhile, Carney faced his own divisions with the provincial premiers he would need to lift bans on US alcohol sales to seal any deal.One premier in particular, Manitoba’s Wab Kinew, had publicly criticised the tentative agreement. Greer acknowledged on Aug 24 on CNBC that Canada sought guarantees he couldn’t unilaterally give, but called reports of a divide between him and Lutnick “a red herring.”Still, he admitted “it could be frustrating for Canadians that we have tariff authorities in two different agencies, but that’s how Congress set it up.”As the haggling continued, the terms shifted.By the morning of Aug 21, the prospect of largely straight tariff reductions on aluminium and steel had been replaced by a push for more limited, nuanced relief.The industry pressure campaign had persuaded some officials to dial back a planned concession to Canada that would have lowered the tariff to 25 per cent from 50 per cent on a quota of Canadian metal imports, alongside reductions for some derivative products. As talks continued, the US told some stakeholders it would appreciate them speaking publicly about the benefits of a deal, one of the people said.Both the US and Canada were signalling as of the afternoon of Aug 21 that officials believed they were on track to finalise everything, some of the people said.As of the night of Aug 21, the Canadians thought they had a deal. Lutnick focused on preserving the scope of the auto-sector concession.While Canada thought the countries agreed to lower vehicle tariffs to 15 per cent from 25 per cent the US said the reduction applied only to light vehicles, not medium- and heavy-duty trucks.The distinction would have imperilled a General Motors Co plant and a Ford Motor Co. plant in Ontario. It’s unclear whether Lutnick’s goal was to derail the pact or reshape it.One person said it appeared Lutnick and Navarro were betting that Canada would accept the terms and not walk away.But Carney said the US demands were too much. US steel and aluminium companies are privately pleased with the collapse. “The breakdown of these negotiations should put an end to proposals to weaken” Section 232 tariffs, said Jon Toomey, president of the Coalition for a Prosperous America.Other groups, including Business Roundtable and Autos Drive America, representing foreign companies that do business in the US, called for a return to talks.There’s little sign of an immediate revival of negotiations.Carney, speaking on Aug 22, sidestepped a question on whether Lutnick killed a deal. “It’s a question for the US,” he said.Carney called the Canadian approach “unified,” adding: “You cannot say that about the United States administration.” BLOOMBERG