Lutnick suggests Canada-China deal threatens CUSMA renegotiation

U.S. Commerce Secretary Howard Lutnick says Canada is “playing with a set of rules that they haven’t really thought through” by moving to reset relations with China ahead of trade deal renegotiations with the United States.

Lutnick made the comments in an interview with Bloomberg in Davos, Switzerland on Thursday.

He’s there for the annual World Economic Forum, at which Prime Minister Mark Carney gave a speech Tuesday asserting the old world order is over, calling out global hegemonies, and urging middle power to work together to counter abuse from great powers.

While Carney sent a clear message in referring to economic coercion and tariffs being used as leverage throughout his speech, he did not mention U.S. President Donald Trump by name.

Then, on Wednesday, Trump addressed the same forum, briefly mentioning during a more-than-an-hour-long speech that Canada should be “grateful” to the United States, and that “Canada lives because of the United States.”

The two countries have been in the throes of a trade war for nearly a year — when Trump imposed sweeping tariffs on Canadian imports — with negotiations to update the Canada-U.S.-Mexico Agreement (CUSMA) already set for this year.

Carney, meanwhile, has just wrapped a trip to China to meet with President Xi Jinping, the first time a Canadian prime minister has visited the Asian country in eight years.

The trip was framed as a bid to reset relations with China after years of acrimony, and as an effort to counter trade threats from the United States by diversifying trading partners.

“I think what that is, is political marketing, right? The Canadians have the second-best deal in the whole wide world,” Lutnick told Bloomberg, when asked about the significant drop in Canadians travelling to the United States amid the ongoing trade war.

“If they continue this path, right, which is a political path of a certain thing, ‘I’m going to go fly to China, I’m going to open up my markets to China, I’m going to take Chinese electric cars and do all sorts of this stuff,’ then when (CUSMA) gets renegotiated this year … do you think the president of the United States is going to say ‘you should keep having the second-best deal in the world?’” he continued.

“They are playing with a set of rules that they haven’t really thought through,” he added.

The commerce secretary chalked up Carney’s behaviour to politically motivated moves, arguing Canada couldn’t realistically opt for a closer relationship with China over the United States.

“Maybe they’re marketing it well for their politics, but they’re surely not marketing it well for their fundamental economics,” he said.

Lutnick, in his interview, also called Canada “arrogant,” when responding to a question about whether he is concerned about “damaging the economic relationship” with the Europeans in the same way Trump has with Canada.

When pressed about the U.S. “style” of negotiation — and whether it is “more harmful than it is helpful” — Lutnick said “people pay attention to it and listen to it.”

“If you just sort of blend in, no one hears anything in Davos, right? Everybody says the same, blah, blah, blah, blah, blah,” he said. “And if you need to break out, and you need to say it.”

He said in his view, Canada has “never expressed to the world that they have the best deal, the second-best deal,” but rather has opted for “complaining,” and pivoting to mending the relationship with China.

“But do you think China is going to open their economy to accept exports from Canada? This is the silliest thing I’ve ever seen,” he added.

During his trip to China, Carney and Xi signed a memorandum of understanding that would see Canada ramp up the amount of oil, natural gas and clean energy it exports to China, and reduce barriers to Chinese investment in those sectors.

They also announced the two countries had inked a quid-pro-quo deal to reduce tariffs on the other’s products, though that agreement has faced criticism from some, including Ontario Premier Doug Ford, who says it risks the Canadian auto industry.

With files from The Vassy Kapelos Show producer David Smith, on the iHeart Radio Talk Network