Canada issues warning on U.S. tariff talk

The Canadian government is launching a pre-emptive warning for American policy-makers considering a tax on cross-border trade: If you hit us, prepare to be hit back.

As she concluded a two-day trip to Washington, Foreign Affairs Minister Chrystia Freeland said Wednesday that she told U.S. politicians that Canada would strongly oppose new tariffs - and would respond in kind.

That early warning comes as Congress begins a debate on a once-in-a-generation reform of corporate taxes, following a series of stalled efforts over the years under successive legislatures and administrations.

Freeland said Canada doesn’t intend to provide running commentary on this debate. But she used her trip to register, for the record, Canada’s feelings about one idea being floated: She told lawmakers that if the final legislation includes a tariff-like penalty on Canadian imports, Canada would retaliate.

“I did make clear that we would be strongly opposed to any imposition of new tariffs between Canada and the United States,” Freeland told reporters.

“That we felt tariffs on exports would be mutually harmful. That if such an idea were ever to come into being, Canada would respond appropriately.”

The good news: it’s still very hypothetical.

Numerous other tax-reform plans have stalled in Congress over the years and this conversation has barely started. There are different ideas within the different parties and even the White House is sending contradictory signals.

President Donald Trump has suggested he dislikes the idea of a broad border adjustment on foreign companies and favours narrow tariffs on certain imports - but then he`s also made more favourable comments about the adjustment idea.

Freeland said she leaves Washington with a sense the plan is far from settled.

“The conversation ... is very much just at a beginning,” she said. ”How it might work and what it might include and whether tariffs might be a part of it, is very much all under discussion . ... All very, very preliminary . ... So we do not know what the position of the United States might be.”

Freeland’s main takeaway from two days of meetings was actually quite encouraging: She said everyone she spoke with viewed Canada as a model trading partner, with balanced trade, and comparable labour standards.