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Saying there is politics involved in the trade spat between Canada and the United States is the truest thing Howard Lutnick has said on the issue. Speaking to reporters on Thursday in Washington, the U.S. Commerce Secretary said the Canadian side walked away from a trade deal over political concerns.

Yes, Prime Minister Mark Carney is thinking about politics, but so is U.S. President Donald Trump. That’s the real story behind the collapse of these talks. All sides in this spat are playing political games, and it is the average Canadian and the average American who will pay the price.

“Canada made the decision for political purposes. They wanted to walk away. This is politics only,” Lutnick said.

He went on to say that he never said the word “French.”

“Do I care about how that Quebecois speak? I mean, what could matter less to America? We don’t care. So the fact is, we never brought those words up. This is manufactured,” Lutnick said.

He then pointed to Donald Trump’s post on Truth Social, saying he has never tried to stop French from being spoken in Quebec. Except that wasn’t the issue at hand, nor was it about French being on labels for consumer goods like ketchup bottles.

The French dispute is a distraction

On Saturday, Carney referred to “efforts to restrict our protections of our language, our culture, and in effect our sovereignty.” What he was referring to there was the Online Streaming Act, which includes requirements for making Canadian content discoverable, specifically French-language content, for online streaming platforms like Netflix.

This is something that U.S. Trade Representative Jamieson Greer has talked about, including in an interview on CBC on Wednesday, though he did say it was not a dealbreaker for the Americans.

“This is something we talked about, but we showed a lot of flexibility. And our view is, there is no way we would let a good deal go by for something like this,” Greer said.

The Americans do oppose this, but Greer said it wasn’t a red line. So it is an issue, but it is also an issue that Carney is playing politics with, especially with a federal byelection in Quebec on Monday and a Quebec provincial election in October.

The main American opposition to the Online Streaming Act was over the imposition of taxes that would force streaming companies to pay for Canadian content.

The real fight is over autos

As for the breakdown in talks over autos, Secretary Lutnick claimed it was the Canadian side that made the last-minute change after a week of talks.

“The words medium and heavy-duty trucks were raised in these trade negotiations Friday at four o’clock,” he said.

The Canadian side of the story, as relayed by multiple sources, is that they believed they had a deal to lower tariffs on all autos. The importance of having tariffs reduced or removed, including on medium and heavy-duty trucks, had been communicated to the White House not just by the Canadian side but also by top executives from General Motors and Stellantis.

According to the Canadian side, they believed the deal covered all autos until the text was being drafted. That matches what Greer told CBC on Wednesday.

“When we got down to talking about what the text could look like, you know, our Canadian colleagues — the word they used was concerns,” Greer said.

The facts aren’t really in dispute. What’s in dispute is whose version of those facts sounds more politically convenient.

Trying to sell a deal that included a permanent 25% tariff on vehicles made in Ontario would be political and economic suicide.

Both sides have elections to win

“My guess will be: as soon as his elections are over, you’re going to see a plane full of Canadian negotiators flying down,” Lutnick said of Carney.

Perhaps he’s right, but there are elections in the United States in November and Senate seats up for grabs in border states like Maine, Michigan and Wisconsin.

Whether it’s Carney calling Washington or Lutnick calling Ottawa, the political calculations will eventually give way to economic reality. The question is how much damage will be done before that happens.

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