U.S. Commerce Secretary Dismisses Idea of Dead Free Trade with Canada

U.S. Commerce Secretary Howard Lutnick dismissed the idea of U.S. free trade with Canada being dead, calling it 'silly.' He mentioned that a significant amount of Canadian goods enter the U.S. without tariffs under the current North American free trade deal.

'We have a plan called the United States-Mexico-Canada Agreement, where almost 75 per cent of goods from Mexico and Canada come in tariff-free,' Lutnick said in an interview on Face the Nation on CBS.

However, Lutnick also indicated that tariffs on Canada will remain in place for now. He emphasized the need for Canada to open its market to the U.S. to avoid tariffs.

These comments come after Prime Minister Mark Carney stated that there is little evidence of the U.S. being willing to strike a tariff-free deal with Canada. Carney also mentioned that Canada already has 'almost free trade' with the U.S. due to tariff exemptions under the USMCA.

According to an RBC report, around 79% of U.S. imports from Canada were duty-free in January 2025, increasing to about 89% in April.

Lutnick highlighted the importance of renegotiating the USMCA to protect American jobs and promote domestic manufacturing.

There are ongoing discussions about renegotiating the trilateral trade pact, with some suggesting a bilateral deal between the U.S. and Canada. However, negotiations are set to take place in 2026.

Carney and his team are working towards a deal with Trump to avoid potential tariffs on Canadian goods. Trump had threatened a 35% tariff on all Canadian goods, citing reasons such as fentanyl imports and issues with Canada's dairy tariffs.

Trump's latest tariff threat has raised concerns, but negotiations between Canada and the U.S. continue in an effort to maintain economic stability.