Lutnick’s Last-Minute Pressure Sank US-Canada Trade Talks

U.S.-Canada trade negotiations collapsed after Commerce Secretary Howard Lutnick pushed for tougher terms in the final stages of talks, according to people familiar with the negotiations.

His intervention came as Washington and Ottawa appeared close to a framework agreement covering tariffs on metals, autos and other goods. President Donald Trump subsequently moved ahead with new duties, while Canadian Prime Minister Mark Carney vowed retaliation.

Lutnick considered the emerging deal too favorable to Canada and became an advocate for U.S. metals producers seeking to preserve tariff protections.

Pressure Builds in Washington

The framework emerged after weeks of negotiations led by U.S. Trade Representative Jamieson Greer.

But Lutnick and Peter Navarro, a prominent tariff advocate, raised objections as the talks approached their deadline.

Their opposition intensified after Trump said last Tuesday that a deal appeared close and postponed 50 percent tariffs on a range of Canadian goods.

Lutnick then became more directly involved, speaking repeatedly with Carney even though Greer had been the main U.S. counterpart for the Canadian delegation.

Canadian officials viewed the shift as another sign that Washington was changing the terms.

One Canadian official said Lutnick was unhelpful and contributed significantly to the breakdown, while stressing that broader disagreements over U.S. objectives had already created serious problems.

The White House rejected claims that Lutnick derailed the talks.

An official said Canada made last-minute demands outside the agreed scope of negotiations. The official also said Lutnick and Greer remained aligned under Trump despite internal debate over the extent of tariff relief.

Greer described reports of a split with Lutnick as “a red herring.”

He acknowledged, however, that “it could be frustrating for Canadians that we have tariff authorities in two different agencies, but that’s how Congress set it up.”

Metals Industry Pushes Back

U.S. steel and aluminum producers emerged as a major force behind the effort to tighten the proposed terms.

Industry groups were alarmed by plans that would have weakened tariff protections and pressed Greer’s office, Lutnick and congressional allies to intervene.

People familiar with the discussions described a rush of calls and meetings as companies sought to stop broader concessions.

Domestic aluminum extruders warned that wide tariff discounts could sharply reduce their margins. The Coalition for a Prosperous America argued that the sector was important to maintaining U.S. aluminum production.

By Friday morning, proposals for relatively broad tariff cuts had been replaced with more limited relief.

A plan to reduce tariffs to 25 per cent from 50 per cent on a quota of Canadian metal imports, together with reductions on some derivative products, was scaled back following the pressure campaign.

Auto Terms Become Another Fault Line

The auto sector created a second dispute.

Canada believed the two countries had agreed to reduce vehicle tariffs to 15 percent from 25 percent.

The U.S., however, said the lower rate would apply only to light vehicles, excluding medium- and heavy-duty trucks.

That distinction would have affected a General Motors plant and a Ford plant in Ontario.

Lutnick focused on preserving that narrower scope as negotiations continued.

It remains unclear whether his objective was to prevent an agreement or force Canada to accept less generous terms.

One person familiar with the talks said Lutnick and Navarro appeared to believe Canada would ultimately accept the revised package rather than walk away.

Carney concluded that the U.S. demands had become too extensive.

Deal Unravels in Final Hours

The collapse came despite signs from both sides that an agreement remained possible.

After speaking with Carney last Tuesday, Trump publicly supported the prospect of a framework and extended negotiations by three days. He also raised the possibility of reviving the Keystone XL oil pipeline.

By Friday afternoon, U.S. and Canadian officials were still signaling that talks were moving toward completion.

Canadian negotiators believed by Friday night that they had a deal.

But the terms kept shifting as Washington narrowed the proposed concessions.

Navarro blamed Ottawa for the failure.

“The USTR did a fine job negotiating. Canada was very foolish not to take the deal,” he said. “It won’t get better. Carney chose politics over the Canadian people.”

The breakdown was welcomed by U.S. steel and aluminum companies.

“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, called for negotiations to resume.

There was little immediate indication that talks would restart.

Carney declined on Saturday to say whether Lutnick had killed the agreement.

“It’s a question for the U.S.,” he said, describing Canada’s approach as “unified.”

“You cannot say that about the United States administration.”