Lutnick may have saved Carney from himself.

The New York Times reported this week that Canada and the United States had agreed on the broad outlines of a trade deal by August 18.

According to the NYT story – the most detailed behind the scenes look to date — Washington would have reduced – but not eliminated – tariffs on Canadian steel, aluminum and automobiles while dropping implementation of other tariffs slated to come into effect on August 19.

For its part, Ottawa was prepared to withdraw remaining countertariffs, encourage provinces to restore American alcohol to their shelves, make administrative adjustments to dairy import quotas and even put Keystone XL back on the table.

Chrystia Freeland had already warned about the risks of being too conciliatory with the United States.

The former deputy prime minister, who led Canada’s negotiations of CUSMA during Trump’s first term, warned that accepting permanent U.S. tariffs despite the existence of a continental free-trade agreement would cross a line no previous Canadian government had accepted.

“That’s a real Rubicon that it looks like will be crossed,” she told Bloomberg Television.

Then Lutnick entered the picture. U.S. demands escalated. Washington sought concessions touching Canada’s freedom to conduct its own trade policy and set its cultural policies, and refused to extend tariff relief to medium- and heavy-duty trucks.

Carney walked away. And he was right to do so.

But the demands that finally killed the deal do not make the agreement Canada was previously prepared to accept any better.

Crossing the Rubicon

Freeland’s warning matters because it goes to the core of Canada’s economic relationship with the United States.

For four decades, Liberal and Conservative governments alike pursued the same broad objective: constrain overwhelming American economic power through enforceable rules while securing progressively freer and more predictable access to the continental market.

The 1989 Free Trade Agreement, NAFTA and CUSMA all moved in that direction.

Based on publicly available information, Carney seemed prepared to move the other way.

The emerging agreement would have established that Canadian goods could remain permanently subject to U.S. tariffs, provided Washington reduced them to levels Ottawa considered tolerable.

The sequencing that seems to have been contemplated at the start of these negotiations makes this even more troubling. After the talks collapsed, U.S. Trade Representative Jamieson Greer said the tariff agreement was supposed to lead to the “announcement of formal negotiations” over CUSMA.

Think about that.

Canada was preparing to enter negotiations over the future of continental free trade after negotiating several major disputes bilaterally, giving up bargaining leverage and accepting a tariff baseline worse than the market access CUSMA was supposed to guarantee.

A Modern-Day Salome

But how did we get to the banks of the Rubicon? After all, Mark Carney was elected in large measure to stand up to an intransigent American president.

Instead of going in the corners elbows up the prime minister spent much of his first year cleaning the ice for the White House.

First much of Canada’s retaliatory tariff regime was removed. Then came the Oval Office meeting where Carney called Trump “a transformative leader”.  The Digital Services Tax disappeared. Then Ottawa accommodated Washington on the Gordie Howe International Bridge. And then Keystone XL was put back on the table.

Like a modern-day Salome, since his election, Carney removed one veil after another, convinced that each accommodation brought the elusive deal closer while leaving him in control of the dance.

But concessions change the power relations.

A bargaining chip surrendered today does not reappear tomorrow. And what Washington obtains under threat can quickly become the starting point for its next demand.

After more than a year of this strategy, what exactly has Canada gained?

Back to Square One

Canada now finds itself remarkably close to where Carney started: the Trudeau government’s elbows-up posture and dollar-for-dollar tariff retaliation.

Except Canada returns there after removing some of its countertariffs, making a series of accommodations and signalling its willingness to accept substantial permanent U.S. tariffs.

We are back to square one, but with fewer cards in our hand and considerably more uncertainty about the future of continental trade.

Carney says America has changed and that his government understood the new reality sooner than others.

Perhaps.

But what did that insight buy us?

After more than a year of short-term accommodations aimed at securing a workable relationship with Washington, Canada is once again facing a trade war – with the much more consequential CUSMA negotiations still ahead.

Before the Next Round

Lutnick, like the president he serves, ultimately wanted too much.

His eleventh-hour intervention blew up an agreement Carney appeared ready to present to Canadians as the product of hard-headed realism.

It may also have saved Carney from crossing the Rubicon Freeland had identified.

Canada must now prepare for the larger battle over CUSMA. Before its negotiators return to the table, Canadians deserve a full accounting of what Ottawa had already been prepared to concede. Pierre Poilievre has also called on the government to disclose those concessions. He is right to do so.

Carney has explained at length why he ultimately said no.

He now needs to tell Canadians what his government had already said yes to.

This is not about relitigating a failed negotiation. It is about establishing Canada’s starting position for the next one. Concessions made – or signalled – under threat do not disappear when talks collapse.

Washington already knows how far Ottawa was prepared to go.

Canadians should know too.