President Donald Trump’s pick to lead the Commerce Department has told US lawmakers that Canada and Mexico can avoid blanket tariffs if they close their borders to fentanyl.
“As far as I know, they are acting swiftly, and if they execute it, there will be no tariff,” Howard Lutnick said on Wednesday during a confirmation hearing before senators.
Trump has said he is considering imposing 25% tariffs on both countries by 1 February.
He has previously tied the tariffs threat to ending illegal migration and drugs crossing into the US through its southern and northern borders.
He called the levy linked to border security were “not a tariff per se – it’s a domestic policy action”.
Later on Wednesday, Canadian Foreign Minister Mélanie Joly met with Secretary of State Marco Rubio to discuss the fentanyl crisis, but told reporters after the meeting that the fate of the tariffs was still unknown.
“We need to continue to engage. The ultimate decisionmaker is President Trump,” she said, adding that working with the Trump administration was “unpredictable”.
Joly added that she would be meeting with lawmakers in Washington until Friday and was “cautiously optimistic” that the matter could be resolved.
She said that Canada was prepared to retaliate with its own tariffs if necessary.
Lutnick, the billionaire chief executive of financial firm Cantor Fitzgerald, said other levies on Canada are to be decided by the end of March or in April, once a review of US trade relationships commissioned by Trump is complete.
He also expressed a preference for assessing tariffs “country-by-country” rather than by product.
“We are treated horribly by the global trade environment, everybody has higher tariffs, non-tariff trade barriers and subsidies,” he said.
“We can use tariffs to create reciprocity, fairness and respect.”
In December, Canada promised to implement a $1.3bn ($900m; £700m) set of new security measures along the country’s US border.
It includes plans to disrupt the fentanyl trade, as well as stronger coordination with US law enforcement. They also brought in a new aerial surveillance task force with Blackhawk helicopters and drones.
The overdose epidemic claims around 80,000 lives a year in North America.
Both the northern and southern US borders have reported drug seizures, though amounts at the border with Canada are considerably lower than those with Mexico, according to official data,
US border agents seized 43lbs (19.5kg) of fentanyl at the northern border between October 2023 and last September, compared to more than 21,000lbs (9,525.4kg) at the southern border.
Canadian border agents seized 10.8lbs (4.9 kg) of outbound fentanyl on its side of the border between 1 January and 31 October of last year, most destined for the Netherlands.
Still, recent reports from Canadian intelligence agencies suggest a growing number of transnational organised crime groups are manufacturing drugs in Canada.
A new report from the Criminal Intelligence Service of Canada paints a web of organised criminal gangs operating in North America: Asian crime groups importing precursor and finished drugs to the region, Mexican cartels supplying cocaine, meth and fentanyl, and US gangs supplying Canadian criminals with illegal firearms.
Canadian law enforcement has also reported fentanyl originating from Mexican organised crime groups in the Canadian drug supply, though the “magnitude and nature” of the operation isn’t clear.
The BBC’s Madeline Halpert contributed to this report.
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