Foreign Affairs Minister Chrystia Freeland says Canada is “very ready” to retaliate if the Trump administration follows through on its threat to impose tariffs on Canadian steel and aluminium this week.
Ms. Freeland rushed to Washington Tuesday in a last-minute bid to avert the levies. She met for more than two hours with President Donald Trump’s trade chief, Robert Lighthizer.
“Our government always is very ready and very prepared to respond appropriately to every action. We are always prepared and ready to defend our workers and our industry,” she said outside Mr. Lighthizer’s office when asked if Canada would retaliate against tariffs. “Canadian steel companies, Canadian steel workers should absolutely know that the government of Canada has their back.”
Prime Minister Justin Trudeau, meanwhile, lobbied Vice-President Mike Pence by telephone on the levies. Mr. Trudeau also spoke with Mr. Trump Friday.
Mr. Trump slapped levies of 25 per cent on steel and 10 per cent on aluminium imported to the United States in March. He gave Canada and Mexico a temporary exemption that expires on Friday.
The Trump administration has said Canada and Mexico will only receive a permanent exclusion from the tariffs once they reach a deal with the U.S. on overhauling the North American free-trade agreement. The three countries have been renegotiating the continental free-trade pact since last summer.
Ms. Freeland and Mr. Lighthizer on Tuesday discussed the tariffs, as well as Mr. Trump’s top NAFTA demand: Stricter rules on the content of cars and trucks made in North America in a bid to move more manufacturing jobs to the United States.
One source briefed on the closed-door trade talks said the U.S. is considering granting Canada and Mexico an exemption from the tariffs in exchange for an agreement in principle to include more North American steel and aluminum in vehicles made in the NAFTA zone. Such an agreement would be fairly broad with the actual percentages of required steel and aluminum to be worked out later.
Another possibility under discussion is a quota, under which Canada would agree not to export more than a set amount of the metals to the U.S. every year, the source said. South Korea has received a permanent exemption from the tariffs in exchange for agreeing to a quota, while three other countries – Brazil, Argentina and Australia – have also reportedly discussed quota-based deals.
Tariffs would hit Canada hard, and could also take a bite out of the U.S.’s own manufacturing sector. Canada is the largest exporter of both metals to the U.S. and depends on the American market for the vast majority of its sales. It is also the largest destination for exports of U.S.-made steel.
Ms. Freeland did not spell out exactly how Canada would retaliate. The European Union, which is also trying to negotiate an exemption, has threatened a series of tariffs targeted at products from politically sensitive regions of the country: Kentucky bourbon, made in Senate Majority Leader Mitch McConnell’s home state, for instance, and Harley-Davidson motorcycles manufactured in House of Representatives Speaker Paul Ryan’s Wisconsin.
“My membership does certainly believe that if the U.S. proceeds with tariffs of steel and aluminum the Government of Canada should retaliate in a significant and meaningful way to defend our domestic interests,” Joseph Galimberti, president of the Canadian Steel Producers Association, said Tuesday.
There is no consensus among members on how the Canadian government should retaliate, Mr. Galimberti said.
Mr. Trump imposed the tariffs under section 232, an obscure rule that allows the President to bring in trade restrictions for national security reasons.
Ms. Freeland has argued that the tariffs should be considered completely separately from NAFTA.
“The idea that Canada – which is a U.S. partner in NATO, in NORAD, by U.S. law is part of the defence-industrial complex of the U.S. – the idea that we could in any way pose a national security threat is, frankly, absurd,” she said.