Lutnick's insults to Canada represent 'real frustration in Washington' — Power & Politics

[0:00] Well, Canada was once again caught in the crosshairs of U.S. Commerce Secretary Howard [0:04] Lutnick today. [0:05] Lutnick was appearing at Semaphore World Economy, a gathering of CEOs and Trump administration [0:10] officials in Washington. [0:12] And Lutnick was asked about Canada's trade strategy. [0:15] Former top Canadian trade negotiator said the other day that time is on... [0:19] Who? [0:20] Christoph Friedland? [0:21] No, no. [0:22] A guy. [0:23] I'm blanking on his name here. [0:24] But the time is on our side because the pressures on the U.S. are only going to increase over [0:28] time. [0:29] Basically, you guys are in political trouble. [0:30] The longer they wait, the better a deal you're going to have to do. [0:33] Good for them. [0:34] That is like the worst strategy I've ever heard. [0:36] They suck. [0:37] They... [0:38] Look, we are a $30 trillion economy, right? [0:42] We are the consumer of the world, okay? [0:45] Carney has a problem with us. [0:46] He gets on a plane and he goes to China. [0:50] Does he think China's... [0:52] The Chinese economy is going to buy his stuff? [0:56] So Lutnick's comments come ahead of the upcoming review of the Canada-U.S.-Mexico trade agreement. [1:01] And joining me now is the person that was on stage posing those questions to Howard Lutnick. [1:05] Ben Smith is the co-founder and editor-in-chief of Semaphore. [1:08] Ben Smith, good to see you. [1:10] Thanks for being here, sir. [1:12] Yeah, thanks for having me on. [1:13] So here we were, Canada standing around minding its own business and Howard Lutnick, who we haven't heard from in a while, takes a shot at the country. [1:21] I mean, what was your impression of what he had to say sitting there right next to him? [1:24] Yeah, I mean, I think, you know, he is known as a difficult guy to negotiate with, and I think what he said was not some kind of like strategic posturing represented real frustration in Washington that the Canadians are not doing what they want when, in the U.S. view, it is overwhelmingly obvious that the Canadians don't have many cards and ought to do what they want. [1:47] I would say that's kind of the underlying point here from the American perspective. [1:51] Yeah, the trade official you referenced here, I believe that was Steve Verhul, right, who is kind of a well-known figure, an extremely well-known and well-respected figure in Canadian trade negotiations. [2:01] But doesn't Mr. Verhul have a point, like, when you look at what is happening with prices in the U.S. consumer markets, when you look at what is happening with the MAGA base, with a lot of things, and with the midterms coming, that things may get more politically difficult for the Trump administration as 2026 rolls along? [2:22] Yeah, you know, I mean, Trump is in obviously real political trouble, and, you know, I think widely viewed as expected to lose the House in the midterms, likely to lose the Senate, but Trump does not treat Congress as that important an actor, and Congress is not that centrally involved in foreign relations, and I think people may overestimate the extent to which a big defeat in the midterms is going to change Trump's trade strategy, his style, the way he approaches other countries. [2:50] Right, but he's largely done so many things by executive order, right? Even on trade, on any number of things. He's had the Supreme Court setback. If he does lose Congress, if he does lose the Senate, he can be distracted by investigations, who knows, any number of things. I mean, what is your sense of the strength he still has to sort of command the Liberation Day tariff agenda from a year ago? [3:14] Yeah, you know, I think the presidency is a very powerful job, and Trump is not, you know, he's not up to the president. [3:21] He's not up for re-election. He's not acting like he cares that much whether he is popular. Like, he's really done almost everything he could this year to destroy his party, his prospects of winning the midterms, and doesn't seem particularly bothered by it. [3:37] You know, this war was a—honestly, however it comes out for the U.S., which is unpredictable, you know, in the Gulf, it's a political disaster at home. [3:46] It's splintered his coalition. It's dragged his numbers to new lows. I think he's, you know, he is trying to reorder the U.S. and the world with an eye to his legacy, not to the midterms. [3:57] And I think, in some ways, Lutnik's confidence and his frustration with Canada reflect that. [4:03] Right. I mean, look, obviously, a very different perspective of it on this side of the border, right, in that essentially everything America wants amounts to a capitulation of some way—of a deal that Trump negotiated in his first term. [4:17] It's like this partnership, which has made a lot of people rich on both sides of the border, they now want sort of a subservience, you're a supplier, you're a customer, you're not a partner, that's it, right? [4:28] I mean, is the dominant view in the United States reflected by the comments of the administration because you hear business groups and lower-level politicians who do not like the direction there? [4:40] I mean, what's your sense of the overall mood nationally on this? [4:44] No, and I mean, I would say, like, industrial policy is broadly popular when Trump or Lutnik go out and say, we don't like these jobs going elsewhere, we want them here. [4:54] Right. [4:54] That's a popular thing to say in pretty much any country. [4:56] Yeah. [4:56] Certainly, I assume it can. It seems like it's popular in Canada too. [4:58] It is. [5:00] But it's not popular in Trump's congressional party, much less in American politics. [5:06] But I think, you know, the core thing, and he got to it a bit later after the comment about Chrystia Freeland and the comment about Canada sucking, you know, he said the idea that Carney is going to try to hedge against the U.S. with China was sort of a thumb in the eye to the administration and a real problem for them. [5:28] And they do not like the idea of BYDs driving around North America. And it makes them look weak. [5:35] And on the other hand, Canada has a 3,000-mile border in the U.S., and what the hell are you doing is their basic point of view here. [5:41] Yeah. And look, a lot of Canadians are deeply uncomfortable with this, but also feel like they've been forced into it, right? [5:48] In that you kind of have no choice but to hedge your portfolio because suddenly, you know, we made a bet to go all in with the U.S., and the U.S. decided to leverage that against us, right? [6:01] Right. And, right. And, I mean, this is playing out for Trump across the spectrum, right? [6:05] The Europeans refusing to help in the Middle East is the most obvious example. [6:08] And I think, you know, the challenge for Canada, and this is what Lutnick said, and I think he obviously has a point, is how much sort of Canadian export do you really expect China to take? [6:18] They don't import that much. They're an export-driven economy. [6:21] And so I think the genuinely held White House view is that you have to do business with the United States no matter what, and sorry. [6:31] Like, it's a pretty – which obviously makes them pretty unpleasant to negotiate with. [6:35] Yeah, it's been an interesting year, and I think there's like 1,108 days left in the presidency, so we're all following that very closely. [6:44] But, you know, you – [6:44] A lot of days. [6:45] It is. It's a lot of – [6:46] A lot can happen in 1,108 days. [6:48] There's a lot of hours. It's only been like 380, 390 days, you know. [6:53] But – [6:53] But who's counting? [6:54] But we are, trust me. [6:56] Well, look, you mentioned the suck comment earlier because this became a thing where he said they suck, [7:02] and then a statement came out from the Commerce Department saying he was misquoted. [7:07] What he was saying is that Canada sucks off America's $30 trillion economy as in we're almost like a parasite is sort of the way it was being described, [7:15] like everyone's a freeloader getting rich off the U.S. [7:19] Has it really come to that, you know, that they suck, sucks off, suck – [7:25] Like, this is where things seem to be right now between the administration and this country. [7:31] I mean, what do you make of that view expressed by the Commerce Secretary? [7:35] Yeah, and elsewhere in his remarks, I would say he kind of played out the sucking metaphor at greater length. [7:42] Yeah, I mean, I think that's sort of – [7:43] I mean, this has not been Donald Trump's view of trade for 40 years. [7:46] So, you know, he probably would have said more or less those words in 1985. [7:52] But obviously, this is an unusual style of diplomacy and does not seem to be bringing Canadians on board politically. [8:00] It would be my observation from down here, but what do I know? [8:03] You know, it's interesting, just as kind of a final point, Ben, that, like, there hasn't been much in the way of formal talks, as we understand it, really since October. [8:11] And I know things are supposed to get going around July 1, you know, with the review. [8:16] I know there's an exchange of things going on, but, like, actual nitty-gritty negotiations. [8:20] And Trump is so distracted by so many things right now. [8:24] How much of a – like, this was the priority of the first year. [8:27] The second year seems to have very different priorities in the Trump administration. [8:31] Like, where does this even fit on their radar, their priority list, their to-do list, [8:35] with everything that is happening with Israel, Lebanon, and Iran, and the Strait of Hormuz? [8:39] It's a great question, because I think trade is actually very high up in Trump's sort of personal legacy-shaping view of the world. [8:48] He does, I think, genuinely want to reshape trade with Canada and Mexico. [8:51] But I think he's – but it's a very personalist government here. [8:57] And one guy makes most of the decisions. [9:00] And it forces – it's hard for them to walk and chew gum. [9:03] It's hard for them to do nine things at the same time. [9:06] And so, with this July 1st expiration of USMCA approaching, it just hasn't gotten the kind of focus that, you know, that the Middle East has. [9:15] I mean, the – you know, Trump has a trip to China coming up early next month. [9:19] And I think they're really straining – the Chinese are working hard to try to get just some substance into it. [9:26] Right. [9:26] All right. [9:27] Well, that will be a heck of a trip to watch. [9:29] Ben Smith, interesting day for you. [9:31] Thank you for joining us and making our show more interesting. [9:34] It's the co-founder and editor-in-chief of Semaphore, Ben Smith. [9:37] Thank you, sir. [9:38] Thank you so much for having me on. [9:40] Appreciate it, sir.