A sharp rebuke echoed from the World Economic Forum in Davos, as the U.S. Commerce Secretary dismissed a recent Canada-China trade agreement as fundamentally unrealistic. Howard Lutnick openly questioned the logic of the deal, characterizing it as “political noise” with potentially damaging consequences.
The agreement, unveiled last week, saw China significantly reduce tariffs on Canadian canola in exchange for greater access to Canada’s burgeoning electric vehicle market. Prime Minister Mark Carney hailed the move as a step towards a stronger, more predictable relationship with the world’s second-largest economy.
However, Lutnick painted a starkly different picture, suggesting China’s economic policies wouldn’t allow for genuine market access for Canadian exports. He questioned the viability of the deal, implying it overlooked the sheer scale of the U.S. economy and its existing trade relationship with Canada.
The criticism wasn’t confined to the economic merits of the agreement. Ontario’s Premier voiced concerns about the potential impact on the province’s crucial auto industry, further highlighting the deal’s ripple effects. He also expressed frustration at being excluded from prior discussions.
Lutnick’s comments extended beyond mere skepticism, hinting at a potential threat to ongoing negotiations surrounding the Canada-U.S.-Mexico Agreement (CUSMA). He posited that the U.S. would be unlikely to accept a scenario where Canada prioritizes a secondary trade relationship.
He argued that pursuing closer ties with China while simultaneously seeking to revamp CUSMA was a risky strategy, suggesting a lack of foresight. Lutnick predicted that CUSMA renegotiations would likely commence in the coming summer months, adding another layer of urgency to the situation.
The Commerce Secretary’s forceful statements underscore a growing tension in North American trade dynamics, raising questions about Canada’s strategic positioning and the future of its economic partnerships.
