Washington/Ottawa – Hopes for a potential U.S.–Canada auto trade deal have been dealt a blow after senior American negotiator Howard Lutnick privately dismissed any immediate prospect of reaching an agreement, according to sources familiar with the talks. The development comes amid growing trade tensions and conflicting economic priorities on both sides of the border.
Sources say Lutnick, a key figure in Washington’s trade strategy team, made it clear during internal discussions that an auto sector deal with Canada is “not on the table right now.” His remarks reportedly stem from concerns that Canada’s domestic policies and subsidies for electric vehicle production clash with U.S. industrial goals and could undermine American manufacturing competitiveness.
The statement has dampened expectations in Ottawa, where officials had been cautiously optimistic about reviving negotiations to secure a more stable trade framework for the automobile industry. The sector is a cornerstone of the Canada–U.S. economic relationship, supporting millions of jobs and extensive cross-border supply chains.
Trade experts say the lack of progress reflects deeper disagreements over issues such as rules of origin, EV subsidies, labor standards, and environmental regulations. While both governments have publicly emphasized their commitment to cooperation, behind closed doors the mood appears far less conciliatory.
“The Americans are focused on domestic reshoring and EV incentives, and Canada’s policies aren’t fully aligned with that vision,” said one trade analyst. “Lutnick’s comments signal that Washington doesn’t see this as the right time to pursue a deal, even though the industry desperately wants certainty.”
Canadian officials have not issued a formal response but have reiterated their belief that closer collaboration in the auto sector would benefit both economies. Industry leaders in Canada have expressed frustration, warning that prolonged uncertainty could deter investment and disrupt supply chains.
The auto industry has faced significant challenges in recent years, including pandemic disruptions, semiconductor shortages, and the global shift toward electric vehicles. Both Canada and the U.S. have introduced ambitious incentive programs to attract manufacturing and investment, but policy differences and competitive tensions have complicated efforts to coordinate strategies.
Lutnick’s remarks, though unofficial, highlight the fragile state of trade diplomacy between the two allies at a time when both economies are undergoing major industrial transitions. Without a clear framework for auto trade, businesses on both sides may face continued uncertainty in the months ahead.