Canada must accept a changed auto landscape, Lutnick argues
Canada is unlikely to secure a free trade deal without addressing American tariffs in the auto sector, according to Howard Lutnick, the Trump administration’s point man on trade. Speaking at a Canada-U.S. conference in Toronto, Lutnick suggested that the United States intends to dominate auto manufacturing, and that Canada must come to terms with being “second” to America in this critical industry.
The remarks, delivered virtually and relayed by multiple attendees under Chatham House Rule, underscored a blunt message: trade between the two countries has shifted forever and will not revert to the era of three decades of broadly free trade agreements.
Key takeaways from the private discussion
“If you look at it where Canada was to where it will be, you’ll be disappointed,” Lutnick reportedly said. He stressed Canada’s strategic location next to the U.S. as an asset, but insisted that “America is first, and Canada can be second.” The question, he said, is: what will Canada do with that proximity?
One source quoted Lutnick as framing the issue this way: “Car assembly is going to be in America and there is nothing Canada can do about it. The question is, what is Canada going to do instead?” The answer, according to the same account, lies in attracting tech investment, mining, and other forms of economic activity that can complement the automotive supply chain rather than compete directly in finished assembly.
Suggestions for Canada’s strategy
Canada could use its geographical adjacency to the U.S. to secure alternative investments and build a more resilient economy around its auto ecosystem, the sources suggested. Another nuance from Lutnick hinted at Trump’s preference for “finished assembly” to occur in the United States, but he stopped short of declaring a complete U.S. takeover of production.
Critically, Lutnick pointed to the ongoing friction with provincial liquor policies. He noted Ottawa’s bans on American liquor sales as a “negative” that Canada must address if it wants smoother cross-border trade in sensitive sectors.
Premier Doug Ford, who attended the session, pushed back publicly, signaling a readiness to respond to any U.S. pressure by defending Ontario’s steel and auto sectors. He warned that retaliatory measures could include leveraging energy exports or other strategic tools to maintain competitiveness.
What this means for future agreements
Asked about a new comprehensive continental deal, Lutnick indicated President Trump’s inclination toward bilateral accords, while appreciating that the current trilateral USMCA/CUSMA framework could endure if Canada demonstrates momentum by strengthening other agreements first. In other words, Canada should deploy “positive building blocks” that could ease a larger renegotiation or reorientation of the trade relationship.
Industry voices offered cautious support for a principled Canadian stance. Flavio Volpe, president of the Auto Parts Manufacturers Association, urged Canada to protect its auto interests and avoid hollow concessions. He argued that any deal should be market-wide, not piecemeal, to safeguard the broader Canadian auto sector.
Observers stressed that any shift will require careful diplomacy. Reince Priebus, a former Trump aide, suggested that Canada engage a broad coalition of voices to influence policy, including through lobbying and multi-stakeholder dialogue. The aim, he implied, is to ensure Canada remains an influential partner even as the administration pursues a more U.S.-centric trade posture.
Implications for Canada’s broader energy and manufacturing policy
Alberta’s leadership, represented by Premier Danielle Smith, highlighted the tension between a stronger U.S. market focus and Canada’s own export strategy. Smith called for new energy infrastructure, including a western coast oil pipeline, to diversify markets beyond the United States and reduce vulnerability to cross-border policy shifts.
As the debate unfolds, Canadian policymakers must balance preserving key industries—autos, steel, energy—with leveraging proximity to the United States to attract investment and ensure long-term economic resilience. The headlines from Toronto make one theme clear: the era of symmetrical, all-encompassing free trade may be over, and Canada’s path forward will depend on strategic partnerships, targeted leverage, and a sharpened negotiating stance.
