US Trade Representative Jamieson Greer said Canada pushed to widen an American offer on vehicle tariffs to cover medium and heavy-duty trucks, and that the demand was among the reasons negotiations collapsed last week.
Speaking on CNBC on Monday, Greer said the United States had assembled a package and that Canada then sought to widen it.
“They said, well, we want the scope of that to be more,” he said. “It’s not just cars. It’s not just passenger trucks. It’s not just SUVs. It’s not just pickups. We want the heavies. We want the heaviest trucks available.”
He called it “a sector with different economics and everything,” and described the request as “just one of many things that the Canadians wanted an expansion on.”
What Washington Says It Offered
Greer said the United States “sought to accommodate the Canadians by cutting tariffs in half on steel, on aluminum, and extensively reducing them on autos, and even on things like softwood lumber.”
Separate reporting has placed the auto offer at a headline rate of 15%, down from the current 25% imposed under Section 232 of the Trade Expansion Act.
Because Canadian vehicle exports are compliant with the Canada-United States-Mexico Agreement (CUSMA), that rate applies only to the non-US content of a Canadian-built vehicle.
Ottawa sought to widen the deduction to all North American content, including Canadian and Mexican parts, a change auto industry officials have said could push the effective rate into single digits. Washington held to deducting US content alone.
Greer said the tariffs are “important to us for national security reasons” and that “we don’t change them lightly,” adding that they are important to the president and “have driven reindustrialization.”
The Truck Question
Medium and heavy-duty trucks sit outside the passenger vehicle categories covered by the American offer, and are produced under different cost structures and volumes.
The CNBC host put it to Greer that Carney’s inability to secure relief on medium and heavy-duty trucks was the breaking point, citing a Wall Street Journal observation that the American position works against Ford.
Greer did not dispute the characterisation.
He answered by describing what the United States had been prepared to deliver and where Canada had asked for more.
Greer’s Account of the Auto Pact
Greer grounded his position in the origins of Canadian vehicle production.
“The only reason Canada has auto production in the first place,” he said, is that “in the 60s, Canada did a very ‘Trumpian’ thing. And they came to the United States and they said, if you’re going to sell into the Canadian market, you have to build here. And there was an Auto pact.”
“At the time, the US economy had a ton of leverage,” Greer said. “They didn’t think too much about the future of deindustrialization. And so they moved some plants to Canada.”
The Canada-United States Automotive Products Agreement was signed in 1965 and removed tariffs on vehicles and parts between the two countries, subject to production and value-added commitments in Canada.
What Started It
Greer traced the dispute to three Canadian measures he said predate the current round.
“The Canadians over a year ago, they prohibited the sale of American wine and spirits in their stores,” he said. “They put limits on how many autos could go into Canada. And even before that, they restricted the sale of US dairy into Canada.”
After roughly a year of American requests to remove them, he said, Canada declined, and the United States responded with tariffs covering about 5% of Canadian exports to the US.
Scale
“This is 5% of imports from Canada. It’s .06% of our overall consumption in this economy,” Greer said. “So there’s no possible way it can really affect U.S. well-being.”
He rejected the term trade war. “I know the Canadians use histrionics like trade war and all these kinds of terms,” he said. “We don’t do that.”
Greer said the two sides “progressed to a point Tuesday night where we had enough agreement among the parties to announce that we had found a way to a deal,” before Canada sought more.
“They said, well, we actually need a better situation than that, and walked away,” he said. He speculated the shift may have been political: “It certainly doesn’t make economic sense, but perhaps for political reasons, they have some by-elections coming up.”
Greer VS. Lutnick
Asked about a Politico report that Commerce Secretary Howard Lutnick felt the framework negotiated by the trade office had been sprung on his agency, Greer rejected the account and dismissed the outlet’s reporting.
“Howard and I talk together every day. We work together every day,” Greer said. “And we only act at the direction of the president. So there’s not really a lot of freelancing going on.”
Of the report itself, he said: “Politico’s a little garbage in, garbage out.”
Greer confirmed that the Department of Commerce holds authority over Section 232 — the statute under which the vehicle tariffs are imposed — and said the two officials met jointly with the Canadians on those issues.
“I understand it could be frustrating for Canadians that we have tariff authorities in two different agencies, but that’s how Congress set it up,” he said.
CBC News reported on Friday, citing four sources with knowledge of the discussions, that Lutnick was dissatisfied with the deal on the table and took particular issue with lowering the Section 232 levy on Canadian-made vehicles to 15% from 25%.
