Commerce Secretary Howard Lutnick reminded us of an important but little-discussed part of trade negotiations with Canada and Mexico — “virtually 75%” of trade between the U.S. and its two neighbors is “already tariff free” because of the USMCA agreement. The tariffs apply to the other 25% of trade, he told BCS’s Margaret Brennan in an interview Sunday. He also adds that after this round of trade talks, Trump will be renegotiating the USMCA next year.

MARGARET BRENNAN: “Next two weeks for the record book,” because you have the August 1 deadline. But President Trump sent letters to most major trading partners announcing higher tariff rates effective August 1. That can hit countries accounting for three-quarters of U.S. imports. Let’s talk about Canada-one of the big ones. Their Prime Minister said this past week there’s not a lot of evidence they can get a trade deal with the U.S. that avoids tariffs. Is your message to Canada, Mr. Secretary, that no matter what they offer at the negotiating table, free trade is gone? There will be a tariff in place? COMMERCE SECRETARY HOWARD LUTNICK: See, that’s silly. We have a plan called USMCA-the U.S.–Mexico–Canada Agreement. Virtually 75% of goods from Mexico and Canada are tariff-free. The President said: if you don’t stop fentanyl and close the border, we will keep this. We need to open the market. Canada is not open to us. We need to open the market. Unless they’re willing to open the market, they’re going to be tariffed. That’s a simple message. It’s fair trade. Reciprocal trade. Why should we have our country wide open while theirs is closed? This is an 80-year wrong that President Trump is trying to fix. Our businesses are going to really, really enjoy it. I think the President is going to open between $ 300 and $ 400 billion in opportunity for Americans. That’s up to 1.5% GDP growth because the President will open these markets. You see it with Vietnam, Indonesia. You’ll watch the other countries decide: if they want to do business with America, let’s open our market to America. That’s the opportunity President Trump is bringing. BRENNAN: We saw framework announcements with the countries you mentioned. Back on what the Canadian Prime Minister said-he’s assuming there will be a tariff. There’s a baseline 10% tariff we are seeing from the administration. Is that set in stone, or will it go to 15 or 20%? LUTNICK: You should assume that the small countries-the Latin American countries, Caribbean countries, many countries in Africa-they’ll have a baseline tariff of 10%. Then bigger economies will open themselves up or pay a fair tariff to America for not opening themselves up and treating America unfairly. What the President’s view is, and what he’s instructed me to do, is say: if you are willing to open yourself up, open your economy to American businesses, ranchers, fishermen-of course we’ll make a better deal. If you’re going to keep your tariffs and tariff barriers holding us down, it seems fair you should pay a tariff to do business with the greatest customer on Earth: the American consumer. BRENNAN: Are you going to renegotiate the free trade deal-USMCA? LUTNICK: I think the President is absolutely going to renegotiate USMCA. But that’s a year from today. BRENNAN: Exactly-75% comes in. Should we expect you to renegotiate? LUTNICK: It makes perfect sense for the President. He wants to protect American jobs. He doesn’t want cars built in Canada or Mexico when they can be built in Michigan and Ohio. It is just better for American workers. The President’s got the American worker’s back. That’s why they elected him. That’s why the stock market is at an all-time high. The President actually understands business-and is doing it the right way.

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