U.S. Treasury Secretary Steven Mnuchin says his top priority is to reach a tax-reform deal this year, a move that could lead Canada to reduce its tax rates to stay competitive.
Mr. Mnuchin spoke at a news conference at the conclusion of a day of meetings in Ottawa with his Canadian counterpart, Finance Minister Bill Morneau, and other senior federal ministers.
The high-level visit from a senior member of President Donald Trump's cabinet comes three days after Canada's Foreign Affairs Minister, Chrystia Freeland, delivered a speech to Parliament expressing concern that the United States wants to "shrug off the burden of world leadership."
Mr. Mnuchin played down the impact of those comments on Friday and delivered a consistently positive message that the United States and Canada will work together on important issues like security and renegotiating the North American free-trade agreement in a way that benefits both nations.
"We have a very close relationship with Canada and we will continue to do so," he said, when asked for his response to Ms. Freeland's comments. "We respect things that people say, but again, I think we're very comfortable with President Trump and the leadership role that the U.S. is playing in the world."
The U.S. debate over tax reform is being closely watched in Canada because of the potential spillover effects on the Canadian economy. A wide range of tax policy proposals has circulated in Washington, but a consensus has not yet emerged. The size of U.S. tax cuts is expected to depend on the results of negotiations related to health care, which could have a significant impact on the U.S. government's financial forecasts.
Canadian business leaders have urged the federal Liberals to reduce taxes to remain competitive with the United States. Mr. Morneau has responded by noting that Canada's corporate tax rates are currently lower than those of the United States, but that he is monitoring the debate.
Mr. Mnuchin said on Friday that he participated in multiple meetings this week in Washington on tax reform, including one in the Roosevelt Room of the White House that included Mr. Trump, Vice-President Mike Pence and senior members of the House and Senate.
"I can assure you, nothing is higher on my priority list than getting tax reform done this year," Mr. Mnuchin said. "I can tell you we are all focused on getting this done this year, and we'll do everything in our power to do it. It is critical for economic growth, not only in our country, but throughout the world."
Mr. Morneau suggested on Friday that Canada is willing to adjust its tax rates if necessary in response to U.S. tax reform.
"I think what we heard today from Secretary Mnuchin is a resolve to move forward on tax reform in the United States and an agenda for trying to get at that as rapidly as possible," he said. "That's positive from our standpoint because that clarity is good. We also want to see the U.S. economy do well because that helps the Canadian economy. So everything I heard today was consistent with what I might have expected. And of course, as the U.S. moves forward in their [tax] plans, we'll make sure that we understand them well to ensure that our tax system stays appropriate."
The day of meetings for Mr. Morneau and Mr. Mnuchin included a broad, closed-door discussion with several senior Canadian ministers, parliamentary secretaries and business leaders.
Both Canada and the United States are promoting infrastructure plans to encourage private-sector investment in infrastructure. Mr. Morneau and Mr. Mnuchin talked about Canada's proposed infrastructure bank and major investors who are involved in infrastructure projects were among the business leaders invited to participate.
The list included representatives of Canada's major banks and insurance companies, as well as BlackRock Canada head Marcia Moffat, Ontario Teachers Plan CEO Ron Mock, and Mark Machin, president and CEO of the Canada Pension Plan Investment Board. Executives from Magna International, Ford Canada, GM Canada, GE Canada, Pfizer Canada, OpenText, Google and Molson also attended.
A roundtable session included Ms. Freeland, Innovation Minister Navdeep Bains, Small Business and Tourism Minister Bardish Chagger, Transport Minister Marc Garneau and Public Safety Minister Ralph Goodale.
Canada's ambassador to the United States, David MacNaughton, also attended, as did Chargé d'Affairs Elizabeth Moore Aubin, who represented the U.S. Embassy. Mr. Trump has yet to announce his choice for ambassador to Canada, although he is expected to nominate Republican fundraiser Kelly Craft.