Ottawa mulls options as NAFTA talks stall
As tariff exemptions on steel and aluminum end, trade retaliation on table
OTTAWA— The Canadian government is preparing options including trade retaliation against the United States as high-level talks to resolve a NAFTA logjam and a looming American threat of tariffs against Canadian steel and aluminum imports stall, the Star has learned.
Publicly, the Canadian government is stopping short of an outright threat of trade retaliation in the face of Friday’s deadline, when Canada’s exemption from import tariffs — 25 per cent on steel, 10 per cent on aluminum — expires.
Behind the scenes, the Canadian government is preparing “a whole series of options that we can pursue if they do that,” which “of course” includes trade retaliation, a senior gov- ernment official told the Star. “Retaliation is one of our options.”
But the official suggested the U.S. government has exempted Canada from trade tariffs at the last minute before, and might well do so again.
Prime Minister Justin Trudeau spoke to U.S. Vice-President Mike Pence Tuesday, and Foreign Affairs Minister Chrystia Freeland cut short a two-day trip to the U.S. capital, returning to Ottawa Wednesday morning with chief Canadian trade negotiator Steve Verheul after a two-hour meeting with U.S. trade representative Robert Lighthizer.
However, Trudeau reported no advances or concessions on the U.S. side.
Trudeau told reporters he had a “good conversation” with Pence and “impressed upon him the fact that I’ve been having direct conversations with the president for close to a year now.” Trudeau suggested Pence “seemed to understand very clearly” Canada’s arguments against being targeted by U.S. tariff threats against other countries.
The prime minister said he underscored the fact there is Canadian aluminum content “in American jets” and Canadian steel “in American armoured vehicles,” and he highlighted that tariffs would hit “American workers, American jobs and American consumers who would pay more for, for various products.”
Asked if he was prepared to retaliate, Trudeau sidestepped a direct answer.
“Nobody wins in a trade war,” said Liberal MP Wayne Easter, chair of the Commons finance committee and co-chair of the Canada-U.S. Interparliamentary Group. “But the government is considering its options and we will exercise some of those options should this happen, you can be assured of that.”
Easter said tariffs could target “endless products because there’s endless trade. One of the areas (where) the U.S. is certainly most vulnerable is their farm sector. And you know who won all those states in the last election?”
Farm-state support was crucial to Trump’s election in 2016.
Canada’s foreign affairs minister portrayed the NAFTA negotiations the same way she has for weeks — as ongoing, in a very intense phase, with a possible deal still within reach.
Freeland told reporters she and Lighthizer mainly discussed how to rewrite NAFTA rules on the auto sector, as well as the Trump administration’s threat to include Canada among countries targeted by tariffs on steel and aluminum imports, adding she also spoke with her Mexican counterpart Ildefonso Guajardo.
Yet despite Freeland’s insistence NAFTA and U.S. tariffs are separate issues, it is clear NAFTA talks are deeply entangled with the steel and aluminum import issue, as well as an investigation the U.S. has launched into the national security implications of automotive imports.
Freeland said she stressed to Lighthizer several times that “Canada considers it frankly absurd that we would in any way be considered to be a national security threat to the United States.”
“We are probably the closest ally of the United States,” said Freeland. She reminded him “when it comes to steel and steel products the U.S. has a surplus in trade with Canada.”
Freeland said the Liberal government “is absolutely prepared to and will defend Canadian industries and Canadian jobs,” saying only she would respond “appropriately.”