Canada hopes to deter US with threat

Canada not ready to discuss support or potential bailout packages for Canadian business sectors

Canada’s finance minister said on Friday he is hopeful the threat of retaliation against US trade measures will persuade the Trump administration to back away from the steel and aluminium tariffs it has imposed on its G7 allies.

The tariffs have landed just as Finance Minister Bill Morneau presides over a meeting of finance ministers from the G7 industrial nations at which the event’s preset agenda has been overtaken by fears of a trade war.

Morneau said Canada’s government isn’t ready to discuss support or potential bailout packages for Canadian business sectors affected by the tariffs. He said the focus now is to use the threat of retaliatory measures to pressure the US into reconsidering its own tariffs before any negative economic impact actually materialises.

Canada’s retaliatory tariffs don’t go into effect until July, which in theory leaves plenty of time for US President Donald Trump to reconsider his position.

“We see that response as being a way to get us back to the table so the impacts actually don’t happen,” Morneau said.

G7 trade war

Bruno Le Maire, France’s economy and finance minister, said a G7 trade war should be avoided.

“On trade, this is a G6 plus one,” Le Maire said after stepping outside briefly from the talks. “We have been attacked by those tariffs. We do not have any other choice but to respond. We would have preferred not to take that kind of decision.”

Le Maire said US Treasury Secretary Steven Mnuchin wasn’t surprised when confronted about the tariffs inside the talks. The French official expressed hope that the discussion will lay the foundation for successful talks during this week’s summit of G7 national leaders in Quebec’s Charlevoix region.

“We think that the G7 [meetings] will be useful if at the end of the G7, the United States is aware of the possible negative consequences of their decision on the unity of the G7 — not only the economic unity, but also the political one,” Le Maire said.

Trump has said the tariffs are needed to protect US steel and aluminium industries vital to the nation’s security.

Morneau has called that “absurd” because Canada is no security risk to the US, and he warned the tariffs will destroy jobs on both sides of the border.