By David Shepardson and David Lawder
WASHINGTON (Reuters) -President Donald Trump’s nominee to run the Commerce Department, Howard Lutnick, said on Wednesday that Canada and Mexico can avoid looming U.S. tariffs if they act swiftly to close their borders to fentanyl, while vowing to slow China’s advancement in artificial intelligence.
Lutnick, a billionaire Wall Street CEO, said at his U.S. Senate confirmation hearing that he has advised Trump to pursue across-the-board tariffs country-by-country to restore “reciprocity” to America’s trading relationships. He also said he would erect stronger curbs on China’s access to U.S. technology, including advanced AI semiconductors.
Lutnick said Trump’s Saturday deadline for imposing 25% tariffs on goods from Canada and Mexico was meant to pressure the two countries to stop the flow of fentanyl into the U.S. The threatened duties are separate from the broad review of U.S. tariffs, trade deals and other trade policy ordered by Trump when he took office last week.
“So this is a separate tariff to create action from Mexico and action from Canada,” Lutnick said of the 25% duty threat. “And as far as I know, they are acting swiftly, and if they execute it, there will be no tariff.”
Canada’s Foreign Minister Melanie Joly, who is visiting Washington to help ease tensions, said Lutnick’s “comments regarding the fact that we were addressing the border issue and fentanyl were positive.”
She said the ultimate decision on tariffs rests with Trump, but Canada is prepared to retaliate with its own trade penalties if the president makes good on his threats.
In a hearing heavy with technical questions, Lutnick repeatedly called for a restoration of “reciprocity” on trade with other countries, which is in line with Trump’s vow to erect a universal tariff of 10% on all U.S. imports.
“My way of thinking, and I discussed this with the president, is country by country, macro,” Lutnick said when asked his preference for how Trump should impose tariffs.
“We are treated horribly by the global trading environment. They all have higher tariffs, non-tariff trade barriers and subsidies,” Lutnick said. “They treat us poorly. We need to be treated better. We need to be treated with respect, and we can use tariffs to create reciprocity, fairness and respect.”
VAST AGENCY
As Commerce secretary, Lutnick, who is worth $1.5 billion according to Forbes, would run a vast government agency with 47,000 employees responsible for U.S. export controls, anti-dumping and anti-subsidy duties, weather forecasting, fisheries, economic data and promotion of investment in the U.S.
Trump also has designated Lutnick as the leader of his trade policy, with oversight of the U.S. Trade Representative’s office, but he did not provide details of how Commerce and USTR would coordinate their work.
He reiterated his plans to resign from his positions as the head of BGC Group, its affiliate Cantor Fitzgerald and other companies, and sell all of his holdings to avoid any conflicts of interest.
Lutnick’s trade comments echoed those made by Trump, who last week said the European Union is “very, very bad to us” and called tariffs “the only way … you’re going to get fairness.”
He criticized Europe’s higher auto tariffs and said that a $7,500 U.S. tax subsidy for leased foreign-made electric vehicles needs to be ended “as fast as we possibly can.”
Lutnick also said he wanted to improve U.S. access to Canada’s largely closed dairy market and would work to protect the U.S. market from fisheries imports from Russia and China.
“We gotta get rid of those communist fish,” he joked.
CHINA AI RACE
Following the U.S. financial market reaction to the emergence of Chinese AI startup DeepSeek’s powerful, low-cost generative AI model, members of the Senate Commerce, Science and Transportation Committee repeatedly asked Lutnick how he would maintain U.S. AI leadership.
Lutnick said DeepSeek had misappropriated U.S. technology to create a “dirt cheap” AI model and vowed to impose new restrictions on Beijing’s technology access.
“They stole things. They broke in. They’ve taken our IP,” Lutnick said of China. “It’s got to end, and I’m going to be rigorous in our pursuit of restrictions and enforcing those restrictions to keep us in the lead, because we must stay in the lead.”
Lutnick said that former president Joe Biden’s legislation to provide $52.7 billion in subsidies for American semiconductor production, research and workforce development is “an excellent downpayment” to rebuild the sector in the U.S., but needs to be reviewed.
CHIPS GRANTS
But he declined to commit to honoring CHIPS and Science Act grants that have already been approved by the Commerce Department, saying he wanted to “read them and analyze them and understand them.”
His comment follows Trump’s order on Tuesday to freeze hundreds of billions of dollars in federal grants, loans and other aid, a move that was temporarily blocked by a federal judge.
The Biden administration raised Trump’s prior 25% duty on Chinese computer chips to 50% this year. But Trump said on Monday he would impose tariffs on all imported semiconductors and pharmaceuticals and add to steel tariffs to push companies to manufacture more of these products in the U.S.
Lutnick said there were too many exclusions from steel tariffs, and these need to be simplified. He added: “I’m a more simple view of tariffs sort of guy, and the president is of like mind.”
(Reporting by David Shepardson and David Lawder; writing by David Lawder; Editing by Leslie Adler, Chizu Nomiyama and Lincoln Feast.)
