U.S. Commerce Secretary Howard Lutnick has refuted claims that free trade between the U.S. and Canada is dead, labeling such ideas as “silly.” During an interview on Face the Nation, he emphasized that a significant portion of goods from Canada already enter the U.S. tariff-free, pointing out that approximately 75% of imports from Canada and Mexico benefit from tariff exemptions under the United States-Mexico-Canada Agreement (USMCA).
Even with these exemptions, Lutnick acknowledged that tariffs on Canada are likely to remain for the time being, urging Canada to further open its markets. “The president understands that we need to open the markets. Canada is not open to us. They need to open their market. Unless they’re willing to open their market, they’re going to pay a tariff,” he remarked.
This comes after Canadian Prime Minister Mark Carney expressed doubts about the U.S. willingness to negotiate a tariff-free deal, noting there’s “not a lot of evidence right now” supporting such a possibility. However, Carney also stated that Canada currently enjoys “almost free trade” with the U.S., thanks to tariff exemptions compliant with USMCA.
A recent report by RBC indicated that around 79% of U.S. imports from Canada were duty-free in January 2025, a figure that increased to approximately 89% by April. Lutnick reiterated the necessity for renegotiating the USMCA, expected to begin a year from now. He emphasized the administration’s intent to protect American jobs by encouraging production within the U.S. rather than through Canadian or Mexican facilities.
As the anticipated 2026 renegotiation approaches, there are ongoing discussions about trading dynamics, including the possibility of a bilateral deal between the U.S. and Canada, a proposal that has garnered mixed responses from Canadian leaders. Furthermore, tensions remain in trade relations, marked by President Trump’s recent threat of a 35% tariff on all Canadian goods, linking it to drug trafficking concerns.
In a landscape filled with uncertainty, both the U.S. and Canadian governments continue to navigate the complex terrain of trade, striving for agreements that can stabilize economic relationships while addressing mutual concerns. The ongoing dialogue presents an opportunity for both countries to strengthen their trade ties, focusing on collaborative solutions that could yield beneficial outcomes for workers and businesses on both sides of the border.