Trump Names Tariff Man. Here’s what he said and what it means for Canada

This article is part of “Washington Watch,” a regular dispatch from CBC News reporters on U.S. policy and developments affecting Canadians.

What’s new

Donald Trump now has a point man in his plan to impose punitive trade tariffs. Someone who openly shared his opinions about them.

Howard Lutnick will now exert his influence on an issue with dire consequences for the global economy.

Trump not only nominated the Wall Street executive as Secretary of Commerce; He also put Lutnick in charge of his tariff and trade agenda, with the additional role of overseeing the US Trade Representative’s office.

American trading partners will eagerly consider Lutnick’s views on Trump’s plan to impose tariffs of at least 10 percent on all imports into the United States.

Lutnick’s public statements on the issue may reassure them – to some extent. In his telling, Trump doesn’t plan to impose tariffs on everything. But his message isn’t all sunshine.

Few countries have as much attention to these details as Canada. Depending on how the tariffs are designed, there are widely different estimates of how much they will hurt the Canadian economy.

What is the context

According to various estimates, Trump’s tariff plan could cost the Canadian economy anywhere Half a percent of GDP To A Destroyer five percent.

The level of damage depends on the details. Trump offered few details during the campaign about how his tariff plan would work.

Will customs duties apply to every country? For each product from each country? Or is it limited to specific products where the United States has a strategic goal of bringing jobs back home?

Lutnick talked about how to apply it. In his view, it would serve two purposes. One is surgical, in order to impact specific industries. The other is like a negotiation club.

The United States has lower tariffs than Almost any countryIncluding Canada. Lutnick says this threat will force other countries to sit down with the United States and drop their trade barriers.

“Of course it’s a bargaining chip,” said the financial services giant’s CEO, Cantor Fitzgerald. He told CNBC During the election campaign during which he led Trump’s transition team.

“Everyone will negotiate with us.”

During that interview over the summer, he said Trump’s plan was not actually to implement these tariffs willy-nilly, which would drive up the cost of products that the United States is happy to import.

This appears to reduce the potential for damage to Canada’s number one exports to the United States: energy, specifically oil, gas and hydropower.

What’s not clear is what it could do for Canada’s No. 2 export: cars. Lutnick has discussed cars at length, in Various interviewsAlthough his comments never mentioned Canada.

He specifically mentioned European and Japanese tariffs, and said the U.S. wants a more level playing field, to allow Ford and GM to sell more cars there.

In another interview with CNBC, Lutnick called on the United States to impose definitions similar to what it faces in Europe and Japan: “equal, equal, equal.”

He said that if the United States threatened to impose large import tariffs, Europe would panic at the thought of losing sales of Mercedes, Porsche and BMW in the United States and would then negotiate a fairer deal with Japan.

“Finally, Ford and General Motors will be able to sell in these places,” Lutnick said.

It was He was later charged For misrepresenting basic facts about the trade in his interviews with CNBC. Lutnick has greatly exaggerated the level of tariffs in Europe and Japan and their role in American auto sales.

But Lutnick has taken a tougher tone recently.

In a long time Podcast In a discussion last month, Lutnick described tariffs as one of the secrets to US prosperity until World War II.

“You have to impose tariffs on the rest of the world. Keep them out. Bring manufacturing back here,” he said.

One trade expert in Washington told CBC News it’s unclear whether Lutnick has a technical understanding of these issues, and he may be relying on lawmakers, including at the US Trade Representative’s office. He said Trump’s announcement may end up inflating Lutnick’s role here.

“Trump’s characterization in his statement may be one of the things we should take seriously, but not literally,” said Simon Lister, a former legal affairs officer at the World Trade Organization.

What’s the next step?

Trump’s main nominees will face hearings in the US Senate. This is likely to happen early next year, as it may clarify the next administration’s plans.

The main player here is Trump. There is no public evidence that Trump sees his own plan primarily as a negotiating tool, as Lutnick described it to CNBC.

When Trump talked about tariffs, he used more punitive language; He has threatened to target companies building factories in Mexico, forcing them to build in the United States — an ominous message for North American countries that rely on a free trade agreement with the United States.

He was Trump’s partners Not reassuringOr in meetings with Canadian officials during the campaign.

Now that the election is over, and a new Trump team is in place, these same Canadian officials and companies will seek greater clarity.

It remains to be seen who else Trump might nominate for economic roles. For example, the roles of the two key trade officials in his first term, Robert Lighthizer and trade hawk Peter Navarro, in his second administration have yet to be determined.

As for what the United States might want from Canada if there were negotiations, here’s a helpful guide. United States publishes Annual list of complaints With business partners. The Canada section runs over four pages and mentions dairy products, provincial liquor boards, streaming access and taxes on large internet platforms.

Trump is also expected to press Canada on military spending, and how to interpret the auto provisions in the current North American trade deal.