Canadian CEO on tariffs: ‘This game of chicken has to stop’

My efforts to reach Commerce Secretary Howard Lutnick went unanswered. I had perhaps naively hoped we could talk — I’ve interviewed him over the years in other contexts and have a lot of respect for him as an entrepreneur, leader, and philanthropist in supporting victims of 9/11. Meanwhile, my colleagues and I were unable to load the Commerce Department’s website yesterday, as it repeatedly generated an “error 503/service unavailable” message. This on a day when so many business leaders are desperately seeking guidance on critical policy changes.

As a dual citizen who started my career in Toronto, I know that Canada’s fortunes are historically linked to the U.S. but the dependency is mutual. Canada is America’s largest export market and its second-largest trading partner, with highly integrated supply chains in areas like autos and energy. The Kaplan Group points out that U.S. companies have 83% exposure to Canada in the business of lead products, which means tariffs could add significant costs to batteries, construction materials, and electronic components. That’s just one example.

I’ll bring you insights from leaders in Mexico in the coming weeks. On the issues being used to justify tariffs, though, Canada and Mexico are not equally culpable. U.S. Customs and Border Protection agents seized 43 pounds of fentanyl crossing the Canadian border last year, compared with 22,000 pounds coming from Mexico. They arrested 24,000 illegal immigrants crossing from the north vs. more than 2 million people from the south.

Lutnick did tell Fox News that “both Mexico and Canada have done a reasonable job on the border,” which infuriated one Canadian CEO I spoke to yesterday. “This game of chicken has to stop,” he told me, noting that he’s already trying to reduce his exposure to the U.S. as much as he can, regardless of whether there’s yet another last-minute reprieve on tariffs. “I don’t know why this administration is so hell-bent on sabotaging its own economy.”

By the time you read this, the tariffs may be delayed once again — bringing relief and continued uncertainty. Add in anger, as a growing number of Canadians are now refusing to buy U.S. products and travel south of the border because of the sudden hostility against their country, which this administration also wants to annex as a 51st state. With Wall Street now worried about the health of the U.S. economy, let’s hope Washington can back away from tariffs and focus on shared wins.

More news below.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

Trump suspends all military aid to Ukraine. It’s the worst-case scenario for Kyiv and the best-case scenario for Putin. “If somebody doesn’t want to make a deal, I think that person won’t be around very long,” Trump said. “That person will not be listened to very long.” The Kremlin said: “If the US stops, or pauses these supplies, this will probably be the best contribution to the cause of peace.”

“I just think he [Zelenskyy] should be more appreciative, because this country has stuck with them through thick and thin,” Trump said. Reality check: Here is a video of Zelenskyy thanking America 94 separate times.

Europe responds by moving to seize $210 billion in Russian assets. European Commission President Ursula von der Leyen also has a plan to mobilise $840 billion in arms funding. Whether the EU can turn that cash into weaponry fast enough to save Ukraine is an open question. 

Trump plans to drop sanctions on Russia. The White House asked the Treasury to draw up a plan for easing economic blocks on Moscow. It’s not clear whether Washington will ask Russia for anything in return.

Jes Staley trial, Day 1: The former Barclays and JP Morgan exec sat in court on the first day of his legal attempt to overturn a decision by the UK’s Financial Conduct Agency banning him from senior roles in banking because he allegedly was not truthful about how close he was to Jeffrey Epstein. The FCA will argue that “Epstein messaged Staley about sex, women and foreign holidays, while working behind the scenes to bolster Staley’s career by liaising with government officials, business leaders and royalty,” according to The Guardian.

“Abrdn” is going back to “Aberdeen.” The money manager ($650 billion AUM) dropped the vowels from its name in 2021 in a rebranding targeted at a younger demographic. The move was widely ridiculed.

From Fortune

Fortune 500 Power Move
Kroger (No. 25) announced that CEO Rodney McMullen has stepped down from the role following an independent investigation into “certain personal conduct” that the company’s board was alerted to on Feb. 21. McMullen had been CEO of the grocery chain since 2014.

Buffett and Bessent disagree on tariffs
Both Berkshire Hathaway CEO Warren Buffett and Treasury Secretary Scott Bessent appeared on CBS over the weekend to share differing messages about the effects of tariffs. On different programs, Buffett warned that “prices will be higher 10 years from now, in 20 years from now” because of President Trump’s tariffs, while Bessent argued that the tariffs will cause deregulation and inflation to drop quickly.

Chipotle CEO will try not to increase prices after tariffs
Chipotle CEO Scott Boatwright promised to hold off on price increases for as long as the Mexican food chain can despite predicting cost increases from President Trump’s tariffs. “We don’t think it’s fair to the consumer to pass those costs off to the consumer, because pricing becomes permanent,” Boatwright said on Sunday.

The markets

• Trump’s tariff trade war goes into effect today and the markets hate it. The S&P 500 lost 1.76% yesterday, ending at 5,849.72. It is now down 0.54% YTD … Likewise, the Dow lost more than 600 points … Nvidia gave up 9% … China announced a raft of retaliatory measures … Stocks were down across the board in China, Japan, and Europe this morning … Bitcoin was down to just over $83K, having lost 16% over the last month … futures contracts on the S&P 500 were flat this morning premarket.

From the analysts

• JP Morgan on tariffs: “The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions. Other than that, they’re fine,” per David Kelly.
• Saxo on European defense stocks: “The European defense sector is not just experiencing a short-term rally but may be at the start of a structural bull cycle, driven by increased military spending in Europe and strategic policy shifts toward greater defense autonomy,” per Jacob Falkencrone.
• Convera on Trump: “President Trump's election initially boosted confidence among small and medium enterprises betting on tax cuts and regulatory relief. Still, this narrative is at risk due to tariff confusion and slumping growth. Last week ended poorly. Trump and Zelenskiy clashed in the Oval Office over Ukraine, leading to a canceled press conference and signaling that an immediate peace deal is unlikely. Geopolitical tensions and tariff discussions have negatively impacted risk assets,” per Boris Kovacevic.
• Wedbush on Palantir: “...there is a growing view in the 202 area code that the efficiency focus of the DOGE initiatives could be a major coup for the likes of Palantir over the next year as its unique software value proposition plays perfectly into this broader Beltway theme under Trump and Musk,” per Daniel Ives et al.

Around the watercooler