Trump’s Commerce Nominee Suggests Canada Can Prevent Tariffs by Securing Border
Canada and Mexico have the opportunity to avoid American tariffs by taking strong measures to secure their borders and halt the flow of fentanyl, as stated by Howard Lutnick, U.S. President Donald Trump’s nominee for commerce secretary, during his confirmation hearing.
“As far as I know, they are taking swift action, and if they follow through, there will be no tariffs,” Lutnick testified in Washington, D.C., on Jan. 29. “And if they fail to do so, then tariffs will be imposed.”
Trump has threatened to impose 25 percent tariffs on all Canadian and Mexican exports unless these countries address drug trafficking and illegal immigration at their borders with the United States.
Ottawa has introduced a $1.3 billion strategy aimed at reducing illegal migration and trafficking across the border, but Trump has reiterated his intentions to impose “substantial” tariffs on Canada. Both Ottawa and the provinces are working together on potential retaliatory measures.
Lutnick, CEO of financial services firm Cantor Fitzgerald, highlighted that Canadian fentanyl labs are controlled by Mexican cartels and urged Canada to prevent the export of fentanyl into the U.S. to show respect. “Therefore, it is not a tariff per se, but rather a domestic policy action: close the border and stop the flow of fentanyl into our country,” he explained.
The U.S. Customs and Border Protection intercepted 43 pounds of fentanyl at the Canadian border in the 2024 fiscal year, whereas 21,000 pounds were seized at the Mexican border. The production of fentanyl in Canada is increasing due to the growing involvement of criminal organizations, as indicated in the 2024 public report from the Criminal Intelligence Service Canada.
Executive Order
Trump issued an executive order directing the United States Trade Representative and Commerce Department to study the use of tariffs to reduce trade deficits with other countries. However, Lutnick clarified that the proposed tax for Canada and Mexico is a separate tariff aimed at driving action on border issues. Trump has requested the tariff study to be completed by April 1.
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Lutnick expressed his desire during the confirmation hearing to see more U.S. dairy products exported to Canada and criticized the treatment of American farmers by the country. The supply management system in Canada regulates the production and demand of dairy and poultry products, imposing tariffs that can reach up to 300 percent.
Lutnick also advocated for the United States to implement a “thoughtful tariff policy” to bring back auto manufacturing jobs to the country. “The car manufacturing left for Canada and Mexico. It’s essential for it to return to Michigan and Ohio,” he emphasized.
In October, Trump committed to renegotiating the United States-Mexico-Canada free trade agreement (USMCA) if elected. USMCA replaced the North American Free Trade Agreement in 2020 after renegotiation during Trump’s first term.
Under the new deal, 75 percent of auto components must originate from North America—increased from the previous 62.5 percent—to qualify for zero tariffs. Canada also had to make changes to its supply management system to offer new trade benefits exclusively for the U.S. dairy market.
