Why UK and Mexico Win, Canada Loses in Trump’s Tariff War
Howard Lutnick’s Trade Stance: Applauding UK and Mexico, Condemning Canada’s Retaliation
A Strategic Vision for American Trade
Lutnick’s remarks come amid a flurry of tariff actions initiated by President Trump, who has made protectionism a cornerstone of his economic agenda. On March 12, 2025, the U.S. implemented a 25% tariff on steel and aluminum imports from multiple countries, a move Lutnick framed as essential to national security. “This isn’t just about trade,” he emphasized. “It’s about ensuring America’s industrial base remains robust and secure.” The policy reflects Trump’s long-standing pledge to revitalize domestic manufacturing and reduce reliance on foreign goods—a promise that resonates with his base but has sparked tension with trading partners worldwide.
The administration’s approach hinges on a simple principle: cooperation begets leniency, while defiance invites escalation. Lutnick articulated this clearly when he warned that nations engaging in “old-school” tit-for-tat tariff hikes would face a “severe reaction” from Trump. “If you make him unhappy, he responds unhappy,” Lutnick said, pointing to Trump’s decision on March 13 to impose a staggering 200% tariff on European Union alcohol products. This dramatic escalation followed the EU’s retaliatory duties on U.S. steel and aluminum, illustrating Trump’s willingness to wield tariffs as both a shield and a sword.
UK and Mexico: Models of Restraint
Against this backdrop, Lutnick singled out the UK and Mexico as exemplars of a more thoughtful approach to trade relations with the U.S. “The British didn’t respond, the Mexicans didn’t respond,” he noted. “You have some countries that actually examine how they do business with us.” This restraint, he argued, reflects an understanding of Trump’s ultimate goal: to dismantle barriers that block American goods from foreign markets while bolstering U.S. manufacturing capacity.
The UK’s decision to avoid retaliation aligns with its post-Brexit strategy of forging stronger economic ties with the U.S. In 2024, bilateral trade between the two nations reached $280 billion, according to the U.S. Census Bureau, with American exports like machinery and pharmaceuticals finding eager markets across the Atlantic. By refraining from tariff hikes, the UK positions itself as a potential partner in Trump’s vision of a revitalized transatlantic trade relationship—one free of the punitive measures that have strained U.S.-EU ties.
Mexico, meanwhile, has navigated its proximity to the U.S. with similar caution. As a key player in the United States-Mexico-Canada Agreement (USMCA), Mexico exports roughly $450 billion in goods annually to the U.S., including automobiles and agricultural products (U.S. Trade Representative data, 2024). When Trump imposed 25% tariffs on Canadian and Mexican goods on March 4, 2025, Mexico initially held back from retaliation. By March 6, Trump paused tariffs on USMCA-compliant goods until April 2, signaling a reward for Mexico’s measured response. Lutnick’s praise underscores this dynamic: nations that align with U.S. interests can expect preferential treatment.
Canada’s Retaliation: A Political Misstep?
In stark contrast, Lutnick reserved his sharpest critique for Canada, accusing its leaders of using retaliatory tariffs as a domestic political tool. “You think it’s about a trade war—this is their way of getting election votes,” he said, referencing Canada’s swift counter-measures to the U.S. steel and aluminum tariffs. On March 12, Canada announced $20.6 billion (CAD 29.8 billion) in retaliatory duties on U.S. goods, effective March 13, targeting everything from steel to consumer products (Reuters, 2025). This escalation followed Ontario Premier Doug Ford’s brief threat to impose a 25% surcharge on electricity exports to the U.S., a move he later suspended after negotiations with Lutnick.
Lutnick’s critique taps into a broader narrative of Canadian defiance. With federal elections looming in October 2025, Prime Minister Justin Trudeau faces pressure to project strength against Trump’s policies. Canada’s trade relationship with the U.S. is massive—exports to its southern neighbor totaled $421 billion in 2024 (Statistics Canada)—and any disruption carries significant economic stakes. Yet Lutnick dismissed Canada’s actions as shortsighted, arguing they misjudge Trump’s resolve. “For those nations that go right back to old-school measures, the president’s going to deal with them with strength and power,” he warned.
The Ontario episode exemplifies this tension. Ford’s initial surcharge threat, aimed at electricity exports to Michigan, New York, and Minnesota, prompted Trump to order a 50% tariff hike on Canadian steel and aluminum. After a March 11 call with Lutnick, Ford backed down, agreeing to trade talks in Washington on March 13. The White House subsequently halted the 50% increase, settling on the original 25% rate—a temporary reprieve, but one that highlights Canada’s vulnerability to Trump’s pressure tactics.
Tariffs as a Negotiating Tool
Lutnick’s defense of Trump’s tariffs goes beyond mere rhetoric; it reflects a calculated strategy. “The president is the best dealmaker ever to sit in that chair,” he told CBS News on March 12, casting tariff threats as a means to force concessions. The EU’s experience offers a case study: its $28 billion in counter-tariffs on U.S. goods, announced in response to the steel and aluminum duties, triggered Trump’s 200% alcohol tariff. The move targets a $7 billion EU export market (Eurostat, 2024), hitting products like French wine and Scotch whisky—staples of European identity and economy.
This tit-for-tat cycle underscores Lutnick’s warning: resistance invites escalation. Yet he insists the endgame justifies the means. “Trump’s intention is to break down those walls preventing American products from coming in,” he told Bloomberg, citing industries like steel, where U.S. production has declined from 120 million tons in 2000 to 81 million tons in 2023 (American Iron and Steel Institute). By pressuring trading partners, the administration aims to reverse this trend, even if it risks short-term economic turbulence.
Critics, however, warn of collateral damage. The U.S. Chamber of Commerce estimates that Trump’s tariffs could cost American consumers $40 billion annually, with higher prices for goods like cars and appliances. A 2025 study by the Peterson Institute for International Economics projects a potential 0.5% GDP decline if retaliatory measures persist—a risk Lutnick downplays. “The markets will adjust,” he said on March 12, rejecting recession fears as overblown.
Global Implications and the Road Ahead
Lutnick’s comments signal a broader shift in U.S. trade policy—one that prioritizes bilateral deals over multilateral frameworks. The UK and Mexico, by avoiding retaliation, may secure favorable terms in future negotiations, while Canada’s defiance could jeopardize its USMCA status. Trump has hinted at revisiting the agreement by April 2, 2025, with Lutnick set to meet Canadian officials to “discuss a renewed USMCA” (National Post, 2025).
Beyond North America, the EU’s escalating trade war with the U.S. suggests a fractured global order. China, too, has entered the fray, imposing tariffs on U.S. farm products in response to a doubled 20% tariff on its goods (BBC, 2025). As these battles unfold, Lutnick’s praise for restraint and condemnation of retaliation frame a clear message: in Trump’s America, trade is a zero-sum game, and cooperation is the only winning move.
A Divisive Doctrine
Howard Lutnick’s stance encapsulates the Trump administration’s trade philosophy—unapologetically aggressive, yet rooted in a vision of American resurgence. By lauding the UK and Mexico while blasting Canada, he draws a line in the sand: nations that align with U.S. goals will thrive, while those that resist will face consequences. Whether this approach delivers long-term prosperity or merely short-term chaos remains to be seen. For now, Lutnick’s words reverberate across borders, shaping a new era of economic brinkmanship.
