Canadian Prime Minister Mark Carney has challenged the policies implemented by Howard Lutnick and Jamieson Greer, Secretary of Commerce and US Trade Representative, respectively, on tariffs.

Carney points out that the use of tariffs and trade barriers for strategic purposes contributes to the decline of multilateral cooperation and a more fragmented international system. 

Howard Lutnick and Jamieson Greer

Lutnick said Thursday that Carney’s recent positions seriously weaken Canada‘s negotiating position in the USMCA.

“Do you think China is going to open up its economy to accept exports from Canada? That’s the most absurd thing I’ve ever seen,” Lutnick said in an interview with Bloomberg TV on Thursday at the World Economic Forum in Davos, Switzerland.

“They’re playing with a set of rules they haven’t really considered,” Lutnick said in the interview. “They’ve given a kind of roadmap by saying, ‘So, I guess we should change the whole agreement.’”

On his trip to Beijing, Carney announced that Canada will allow up to 49,000 Chinese electric vehicles to enter the country at the Most-Favored-Nation tariff rate of 6.1%. In addition, the agreement provides for raising the import limit to 70,000 units in the fifth year.

In exchange, the Chinese government agreed to reduce its retaliatory tariff on Canadian canola imports. The combined rate will drop from 85% to approximately 15% as of March 1, as established in the agreement.

Trade deficits

Greer said that the plan to impose more tariffs on countries with larger trade deficits with the United States worked in the first year of President Donald Trump’s second term.

He gave examples and arguments in an opinion piece published in The Financial Times and released by the White House Trade Representative on December 22, 2026.

Greer said that after months of intense negotiations, the U.S. government established a new structure for balanced trade on July 31: 10% tariffs for countries with which the United States has a surplus, 15% tariffs for countries with which it has a small deficit, and higher tariffs for countries with which it has large trade deficits.

In his article, entitled The Year of the Tariff, Greer explained that there are three ways to measure the success of this new trade policy. In addition to boosting overall economic growth (3.8% in the second quarter), it should reduce the trade deficit, increase wages for US workers, and increase the manufacturing sector’s share of the country’s economy.

The Plan Works

“The outlook is positive,” he concluded. He gives the following reasons. The core inflation rate, at 2.7%, is the lowest in five years. Since August, the overall goods trade deficit has declined, including a year-over-year decrease of approximately 25% in the goods deficit with China. Inflation-adjusted wages have increased. And the manufacturing sector is recovering.

«This last point is certainly difficult: it took us decades to lose our industrial primacy; rebuilding it will not happen overnight. But this fall, the first rare earth magnets manufactured in North America in 25 years rolled off the production line in South Carolina. The Philadelphia Shipyard has orders for a dozen commercial vessels, including two liquefied natural gas carriers, the first to be built here in nearly 50 years,» he noted as examples. 

Greer added that foundries and forges are being reactivated, concrete has been poured for the foundations of new pharmaceutical facilities, and automobile production lines are returning to the United States.

He then posed a question: “If anyone wants to criticize this as a difficult start, I accept that. They should consider the hypothesis: if tariffs were eliminated, would this new production take place?”

His final conclusion: “Our reindustrialization requires more than just smart trade policy. We need better technology, labor, regulatory, fiscal, and energy policies—all of which are priorities for the Trump administration. From a trade perspective, I am glad to see that the plan is working.”

China

At the Davos forum on Tuesday, Carney said the rules-based world order is breaking down, urged middle powers to unite and adapt to rivalries between major powers, and warned that economic integration is being used as coercion, proposing new strategic alliances. And in Beijing, he described China as a “more predictable” trading partner than the United States.

“We should see it as just political noise coming from a prime minister,” Lutnick said of Carney’s positions. “I don’t think it’s real, because he took out the calculations of the Canadian economy and doing business with the $30 trillion U.S. economy. It’s impossible to change what they have today.”