Let’s discuss the evidence.
Understanding the Setup
- The US has two negotiators, Commerce Secretary Howard Lutnick, who oversees the so-called Section 232 sectoral tariffs, and US Trade Representative Jamieson Greer.
- The consensus opinion was that a deal was close. Carney thought a deal was close. Trump announced a deal, arguably a huge red flag.
- There was a last minute dispute over tariffs on light trucks. It’s possible this was a simple misunderstanding. Each side may have had a different understanding of autos.
- The killer was two last minute demands by someone on the US side. The first pertained to Canada’s ability to make deals with other countries. The US wanted restrictions.
- The second last minute demand by the US sought to curtail the use of French, one of Canada’s two official languages. This dispute pertains to digital services and US-based streaming services and levels of French-language content.
- Canada’s ambassador to the US, Mark Wiseman, likened the negotiations to a handshake deal to buy a house — only for the prospective buyer to learn appliances weren’t included, the furnace had no warranty and neither the garage nor yard is on the same property
Point three in and of itself was a sensitive situation. Then out of the blue came demands four and five.
Point four alone was sufficient for Canada to walk away. No nation would agree to that.
Lutnick and Greer both had to understand that as well. So, what’s the point of making those last minute demands unless it was to purposely kill the deal?
Lutnick on When America Was Great
Lutnick Lies About Unions
Lutnick Lies About Epstein
One-Sided Respect
LutnIck’s External Revenue Claim
Lutnick Is a Liar and a Con Man
That Lutnick is a liar and a con man does not prove he purposely sabotaged the deal.
But Occam’s razor (the simplest explanation is the one that’s most likely) suggests that is what happened.
The Dumbest Trade War Revisited
The Wall Street Journal comments on The Dumbest Trade War Revisited
President Trump took exception last year when we called his tariffs against Canada and Mexico the dumbest trade war in history. It got dumber this weekend as Mr. Trump escalated with another round of border taxes on Canadian imports, a mere 10 weeks before midterm elections.
Mr. Trump issued his latest tariff threat against Canada last month under Section 338 of the 1930 Tariff Act. The law lets the President impose tariffs up to 50% on countries that discriminate against “commerce of the United States, directly or indirectly” in relation to foreign countries. No previous President has used this power.
Mr. Trump set a deadline of midnight on Friday for Canada to reach a deal to avert 50% tariffs on $20 billion of goods. The countries were close to an agreement until, poof, the cease-fire blew up at the last minute with each side blaming the other.
To justify his new tariffs, Mr. Trump said Canada discriminated against the U.S. by retaliating against his national-security tariffs on autos. He also claimed that Canadian provinces had restricted sales of U.S. alcoholic beverages in response to his “emergency” tariffs last year. Yet U.S. distillers begged Mr. Trump to hold off on his Section 338 tariffs. They know the longer Canada locks out American booze, the tougher it will be to regain market share.
The President also cited longstanding grievances over how Canada treats U.S. dairy. Press reports say the Trump team raised other issues during recent negotiations, including Canada’s treatment of U.S. tech companies and digital taxes. Most of these issues could have been addressed as part of a renegotiation of the U.S.-Mexico-Canada Agreement.
But Mr. Trump doesn’t want to update the deal. He wants to rewrite it unilaterally. As Mr. Carney noted Saturday, the President has contrived an array of pretexts—from fentanyl trafficking to trade deficits—to bludgeon Canada with tariffs.
Mr. Trump’s complaint about the U.S. trade deficit with Canada is particularly ironic since the latter owes entirely to imports of heavy crude oil that is especially well-suited for U.S. refineries. Exclude Canadian oil, and the U.S. would have a trade surplus. But U.S. refineries would also operate at lower capacity.
In any event, last week the two sides were close to an agreement that would reduce the U.S. auto tariffs on Canada to 15% (the same rate as South Korea and Japan) from 25%, and on steel and aluminum to 25% from 50%. These tariff reductions would help U.S. manufacturers, which have integrated cross-border supply chains.
Mr. Carney said Saturday that a major reason the deal blew up is that the Trump team refused to ease tariffs on heavy and medium duty trucks, including those made at Ford’s plant in Ontario. Why is Mr. Trump punishing Ford, America’s largest auto producer?
Mr. Trump’s latest round of border taxes will hit an array of consumer goods, construction materials and manufacturing components. Republicans are already getting pounded on the campaign trail over his tariffs and inflation. One reason for Mr. Trump’s frigid approval rating is that voters believe Mr. Trump is waging blunderbuss wars without a strategy, and on trade they’re right.
The Journal is correct on this one, but the article misses the absurd last minute demands by either Greer or Lutnick.
Related Posts
March 12, 2025: Lutnick Says Tariffs Can Eliminate the IRS and Balance the Budget
Lutnick: “We’re going to make the External Revenue Service replace the Internal Revenue Service.”
To balance the budget with tariffs, the administration would need to bring in $7 trillion. To replace individual and corporate income taxes, tariffs would need to bring in $3.1 trillion.
Team Trump proposes $918 billion in “reciprocal tariffs” to make the trade deficit go away.
But to balance the budget and eliminate personal income taxes, Trump would need to collect $7 trillion in tariffs on a net trade deficit of $918 billion.
I would love to hear a detailed explanation of exactly how that works.
August 22, 2026: Hypocrite Trump Eliminates Beef Tariffs But Only Through the Election
The price of beef is getting to Trump (and everyone else). But ranchers are very upset by the move.
Fact Check on Trump’s Claim “Canada Ripped Us Off”
In February, I did a Fact Check on Trump’s Claim “Canada Ripped Us Off”. What’s the Real Story?
For 2025, the total balance with Canada was -53 billion. But the oil balance was -84 billion. Excluding oil, the US has a goods trade surplus with Canada of 31 billion.
Q: Why exclude oil?
A: Because the US needs Canadian oil and gets it at bargain prices too!Energy Synopsis
- The US gets Canadian oil at a 15 percent discount, and it’s oil that our refineries are built to handle.
- The US exports West Texas Intermediate, a higher grade of oil, at a higher price.
- Excluding oil, the US has a trade surplus with Canada for 18 years.
Q: What About Services?
A:The US runs a constant services trade surplus with most of the world.
Excellent article and coverage. I’d give you a 5 star review. Even with the (Star Limitation of 3). However, I’m not authorized to bestow awards here 😉
That said, Canada should hit Trump/Lutnick where it hurts with an export tax on crude oil. Then they should use that revenue to accelerate the construction of export facilities. At a minimum, they should announce that strategy publicly.
I love America and want lower fuel prices and a trustworthy government. Getting rid of Trump is the answer to both of those desires.
It is clear to all Americans that do the math that tariffs will never be the answer to Trumps insane war spending and refusal to tax his corporate donors and media spokescompanoes.
Trump has no right to tell any sovereign nation what it can do behind the sanctity of its borders. Yet the US Department of Injustice colludes with him and his co-conspirators in the Epstein cover up on our homeland.
“curtail the use of French”
Are you kidding me?
Canada has, in the past, almost torn itself apart over this issue.
If our negotiators were that ignorant, then holy crap.
If they were knowledgeable, then this was insane
This entire administration is a clown show, top to bottom. No disrespect to professional clowns.
They are grifters, plain and simple grifters.
What diff does it make if the trade deal was wrecked before an agreement? They wreck them all the time — before, during, and after “agreements”. “Agreement” is a word they say to mean “you gave that up already, now we want more”.
At least Trump was successful at distracting attention from his Iran failure and Epstein relationship for a short while. Trump is too compromised to be president. What a mess
Never ever under-estimate what this bunch of incompetents do or likely to do. Absolute worst bunch of questionable characters to have ever been permitted to spend one night in the white house.
Perfectly competent crooks. They’re getting away with every crime.
The norms and ethics are falling faster than a befuddled Congress and public can keep up. I just saw an article confirming that this is very AI-enhanced. There is no way even a nefarious individual genius could produce this nonstop stream of filth.
Think of the upsides. Trump at last made Warren Harding and Andrew Johnson look great.
Purposely sabotaging a trade deal during war time – that could easily be treason
Treason is a very fuzzy word to start tossing around, in any direction. it is like “love” — a word too freighted with countless ambiguities, variances, prejudices and abuse potentials to be reliable.
The only way Lutnick added point 4 and 5 is at Trump’s behest.
My guess is that they realized that what they agreed to on point 3 was a mistake and there was no way to back out of it other than scuttling the deal. Potentially related to tariff inversion:
https://driving.ca/column/motor-mouth/auto-trade-agreement-cusma-deal-trump-carney
What I can say is that the more I dive into CUSMA’s tariff machinations, the more Byzantine they become.
Here’s one example called “tariff inversion.” As we all know, like Canadian-built cars, steel produced in Canada has been heavily tariffed. As a result of these negotiations, according to the Financial Post, those steel tariffs will now be reduced to 25%. However, that’s still higher — quite a bit higher — than the 2.5% to 4% we’re hoping that Canadian cars heading south will be charged.
In other words — and hence the term “inversion” — the duty on raw materials is higher than it is on the finished product made of that material. That means, all things being equal, an American-built car using imported steel would be more expensive than its Canadian counterpart, the exact opposite effect The Donald was looking for when he started this silliness.
Until now, nothing has been done to counter this anomaly. Have the Americans figured it out yet? Will they do something to right this inversion? Perhaps something as ham-handed as forcing Canadian automakers to buy American steel — and aluminum! — to build our cars when we, of course, have plenty of both here in Canada? Again, how the steel tariffs affect the viability of exporting cars to the United States is not something that’s being discussed in the mainstream media.
Point 4 is the problem and verification probably is the sticky part. Basically, Canada is a pawn in the US-China trade dispute but a pawn that commands a very important square for both of them hence Carney’s optimism in getting a decent deal from Trump in the end.
I wonder if Lutnick knows what happened the last time there was a significant conflict between the ISA and Canada, then a British colony. It was in 1812.
In their arrogance and unwisdom, Congress declared war and invaded Canada. At the time the capital was Kingston Ontario. That war is the reason our capital is in Ottawa now. The British-Canadian forces responded in kind, captured Washington and burned the whole city to the ground including, famously, the official residence of the President. Every time I hear the term “Whitehouse” I am reminded of the reason it had to be rebuilt from scratch.
Declaring tariff war on Canada, a nation on which the USA is utterly dependent for fertilizer, minerals, vehicles, raw materials and oil, is as unwise as the War of 1812 and will result in similar, though economic, consequences. Yes…to the metaphorical ground.
Arrogance is no substitute for the respect of friends.
There is no friendship between nations, just interests.
But as a durable, successful marriage or business partnership will show you, the blend of interests can be very nuanced, alive, creative, continuously adapting and renewing, and fruitful. Or it can decay into hell ((or countless intermediate states).
Britian tried to wrest control of the old Northwest Territories from the US and it ended badly for them. Look up the Battle of the Thames.
Rather, the US never had allies, but vassals who believed that the US were a normal country to be in alliance with. The Pedophile Orangutan, as a harbinger of a terminal empire, is just enforcing the role of other countries in the Usonian orbit.
Occam’s Razor, meet Hanlon’s Razor: “Never attribute to malice that which is adequately explained by stupidity.” Although with the Trump administration I admit even Hanlon might call it 50-50 between malice and incompetence in any given situation.
Crooks, especially crooked politicians and certain agencies, must love it when people use these simplifications for drawing conclusions.
The major problem is always the same one, transshipment. It seems everyone is expecting to get concessions because the midterms are coming up be it Canada or Iran. Might as well put it off till after those are out of the way.
So the US wanted to curtail Canad’a current (and accelerating) propensity to cozy up and to China. More poor Canadian (read: anti-US) behaviour being rightly called out by the Americans.
As for the French language nonsense, Canada has been saddled with uneconomic and pointless French language laws for decades. Those ridiculous requirements are now (again, still) haunting Canadians, all for the sake of appeasing Quebec separatisits (who still want to separate, of course). Good, these laws should have never seen the light of day, and God willing, this econimic price being paid will wake people up to how utterly nonsensical Canadian leadership has been over the last several decades.
Canada is complicit in its own demise.
The Trump admin knows Canada better than Canadian leaders (and Mish, eveidently).
Stupid take, neither of these are business for a trade deal, they are poison pills. Anyone with an ounce of sense recognizes that.
Quebec is a poison pill for Canada. Funny as it sounds but successive French administrations even before De Gaule have viewed the world through the lens of the battle between the English-speaking civilization and the French-speaking one. Even Macron talked about it in public recently.
Patti LaBelle did about a half century ago, too.
Patti did what?
So now the shoe is on the other foot. The US has imposed its tariff boogeyman and Trump has until September 8th before Canada retaliates. Trump being Trump will likely up the ante which will force Canada to bring out the heavy gun being energy.
Even if they make a deal Canada is going to continue to move away from dealing with the US as fast as possible and given that Trump has highlighted Canadian reliance on the US this will continue when Trump is gone. Reliance on Canada as a trading partner in the future is now in question which is why the US sought to include some level of exclusivity into the deal and why Canada refused to allow it.
Trump will get his way in the long run in that the trade deficit will be reduced but it will be reduced by selling oil and natural gas to Asia via pipeline to the west coast and perhaps it will have less less electricity to export to the US by attracting data centres into Canada. Yes, that is years away but Trump has set the process of finding alternatives to dealing with US in motion.
Perhaps Sept 8 will be Taco Tuesday
I’ve always been of the opinion that it is better for the US to import oil rather than to use up its own stock. Keeping our oil in our ground is like money in the bank. Oil is a finite resource. As it becomes scarcer, the price will have to rise.
Exactly, I have had this opinion since I started my career in the oil patch in1969 and feel even more strongly about it now.
I believe keeping oil in the ground is better than money in the bank as dollars lose purchasing power with every new dollar introduced and oil gains purchasing power with every barrel consumed.
Need it use it before something like fusion comes along and makes oil much less useful. It is not a question of if but when.
Fusion energy has been “just around the corner” for the last 50 to 60 years.
Just like those Iranian nukes.
We’ll probably get both around the same time.
Eventually the corner will be turned and then what happens to the price of oil?
“Brazil is the country of the future and always will be.”
I’m only typing that because it’s funny and might be analogous to fusion energy. I have no personal insight into Brazil. Unfortunately haven’t been there (yet).
Time to boycott Canadian toque’s. That will teach ‘em.
Trump’s policies are hurting most Americans and his popularity is at all time lows. But he wants/needs to be popular.
So he resorts to his tried and true technique: the politics of hate.
Find or invent an enemy and claim they are the reason for your suffering. Instead of focusing on Trump being the true cause. The MAGA faithful are dumb enough to fall for it over and over again. Soon they will be commenting on this site, chastising those evil Canadians.
It’s been a constant theme in Trump’s
Presidency. China, Iran, Venezuela, Greenland, Panama, Mexico, Canada, the EU. In fact the “entire world is ripping us off”.
It’s all he knows. And we all suffer because of it.
trump is transparent about this, no doubt. but is he really any different from any POTUS or voter since Ike blew up Persia after an election and propped up the very evil Shah of Iran. i must confess my family made boatloads of money off the shah for decades.
Yes. He is.
Your point is indisputable, but USA has proven itself to be a nation of short-sighted amnesiacs.
The entire planet watched in absolute horror during the January 6th assault.
Everyone foolishly assumed Trump was politically dead and buried.
That naive optimism backfired spectacularly.
He didn’t just crawl back; he returned completely unhinged and vastly more dangerous, fueled by a thirst for vengeance and weaponized to dismantle the country from within.
the real occam’s razor old sport is democracy works. assholes will elect assholes to do asshole things. amerikans are assholes. at least the 98% that vote uniparty blue and red. i know that is offensive, but it is the most insightful reason for the past century. you’ll come around one of these decades before your dirt nap. i do enjoy your blog and most of your customers who contribute via comments. some are real experts in their fields. pappa D and frosty……….maybe you could pepper your blog with some stock or bond or commodity or FX picks for debate…………..
Ah, did Howie pull a John Bolton and scuttle the deal like Walrus Man did with North Korea?
Was it Howie whose sons bought up a bunch of tariff rebate credits at low-ball offers just before the tariffs were overturned by the courts? Sounds like the post Revolutionary war days when insiders were frantically riding up and down the colonies buying up war debt for pennies on the dollar while trying to get those debts guaranteed by the federal government.
You know when America was great, Howie?
When gold and silver were money and money-changer schmucks like you couldn’t as easily get rich off the sweat of other people’s brows.
Before there was a central bank to steal the wealth of the People through the insidious tax of inflation.
When people like Aaron Burr could challenge schmucks like Alexander Hamilton to a duel and then shoot them dead in the streets.
If only your dad had been wearing a condom the night you were conceived. Of all the sperm that made it into the egg, it had to be you.
Enjoy your life while it lasts Howie. It doesn’t get better where you’re headed. Do you like saunas?
🖕🏼🖕🏼🖕🏼🖕🏼🖕🏼🖕🏼🖕🏼🖕🏼🖕🏼🖕🏼🖕🏼🖕🏼
ha ha ha. i had a close pal, when i lived, in charleston SC who always bragged he was related to aaron burr. the boys down there LOL. only better one was a fella who was a descendant of the old actor gone bad at ford’s theatre. that small city is filled with the greatest characters in this dying empire. those boys knew the empire would crumble like their old empire that lasted from 1600s to 1865.
Ugh. So tired.
when a party wants a “all or nothing” type deal, nothing can be the result
This result is worse than “nothing”, an endless series of tit-for-tat retaliations out of spite.
Even if you win a pissing contest, you’re still soaked in piss.