LILLEY: Canada can escape some tariffs, but not all of them

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Donald Trump’s point man on trade says that the United States just wants a little respect and for Canada to clean up its border mess. Howard Lutnick, the Wall St. billionaire who took over the investment firm, Cantor Fitzgerald, after it was nearly wiped out after 9/11, appeared before the Senate Commerce Committee in Washington on Wednesday.

Lutnick said there is a way for Canada to avoid the 25% tariff threat if we take the right action but also said over the long term, there could be tariffs on our manufacturing industries and took aim at Canada’s dairy sector.

In a hearing that moved quickly, addressing AI, tech, manufacturing and agriculture, one thing was clear: The Trump administration is putting America first. Lutnick at times described a trading relationship with the rest of the world that took the United States for granted, something they would not stand for anymore.

“Respect America,” Lutnick said. “If we are your biggest trading partner, show us the respect, shut your border and end fentanyl coming into this country.”

While Canadian government officials say that very little fentanyl crosses into the United States from Canada, American officials say fentanyl and its precursor ingredients are increasingly coming from Canada. In fact, there was a spike in seizures of fentanyl being moved across the Canada-U.S. border at the end of 2024 and the Americans are concerned about stories like the superlab being busted in British Columbia.

“You know that the labs in Canada are run by Mexican cartels. So, this tariff model is simply to shut their borders,” Lutnick said.

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That’s the good news; we can escape the 25% tariff with the right actions – if we believe Lutnick. The bad news is that long term, we may face tariffs that seek to move production back to the United States.

Gary Peters, the senior senator from Michigan, pressed Lutnick on what tariffs could mean for the auto industry in his state. More than once, Peters pointed to the integrated nature of the North American auto industry – an integration that goes back more than a century.

Lutnick said that beyond the tariffs related to border issues, tariffs in the auto sector would likely be coming.

“We are going to study those, the actions and the economy of America and how it works,” he said.

There is clearly a push by this administration to move more production back to the U.S.A. What we need to do on that front is make sure that it doesn’t result in a loss of production here, which can happen if we play our cards right.

Beyond auto, Lutnick took aim at Canada’s dairy industry, which he says has treated the Americans unfairly.

“Canada, as we spoke about, treats our dairy farmers horribly. That’s got to end,” Lutnick told Wisconsin Senator Tammy Baldwin.

“If Canada is going to rely on America for its economic growth, how about you treat our farmers, our ranchers and our fishermen with respect,” he said.

The truth is that we do need to fix our borders, not just for the Americans, but for ourselves. We need to ensure that cross-border illegal immigration which is rising from Canada — even as it is decreasing from Mexico — is taken care of rather than simply being dismissive.

We have friends in America who support our agricultural and manufacturing trade with them. Messing it all up at this point to try to make some political point would be economic suicide.

That said, don’t put it past the Trudeau/Carney/Freeland Liberals to do this if they think it can help them.