Donald Trump's advisers say he does not want to spare Canada and other U.S. allies from punishing tariffs on steel and aluminum – but are also suggesting individual companies can apply for exemptions and no final decision has been made, adding to mounting confusion over the President's looming trade attack.
Canada is seizing on the chaos in Mr. Trump's White House to make a full-court press for an exemption ahead of the final rollout of tariffs expected this week. And Ottawa has high-powered help within the U.S. government and big business, as even Mr. Trump's own administration is starkly divided between economic nationalists girding for a trade war and free-traders who want to avoid battle.
Mr. Trump on Thursday announced tariffs of 25 per cent on steel and 10 per cent on aluminum, for reasons of "national security." While the move was seen as targeted at China and other U.S. rivals, it will disproportionately hit Canada, which is the largest supplier of both metals to the United States. Ottawa contends it is absurd to deem Canada, one of the United States's closest and oldest allies, a threat to its national security.
Mr. Trump, who unveiled the levies on the spur of the moment at a meeting with U.S. steel executives, revealed no further details. Sources in the Canadian government and steel industry on both sides of the border said the White House had given them no answers on how the tariffs would actually work.
Peter Navarro, Mr. Trump's nationalistic trade adviser, told CNN's State of the Union on Sunday that Canada and other U.S. friends, such as the European Union, would be hit with tariffs.
"At this point in time, there's no country exclusions," he said. "As soon as you exempt one country, then you have to exempt another country."
Commerce Secretary Wilbur Ross told ABC Mr. Trump is "talking about a fairly broad brush" with "no country exclusions" on the tariffs.
Both Canada and the EU have threatened retaliation if they are not exempted. The President on Saturday threatened to retaliate against the retaliation. "If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.," he tweeted.
Despite the harsh words, both Mr. Navarro and Mr. Ross indicated there might still be room to avoid a worldwide trade brawl. Mr. Navarro said there would be "an exemption procedure" for specific instances where foreign steel was necessary for U.S. business.
One steel industry source said Mr. Navarro's idea is to allow companies or industries to petition the U.S. government to have their products exempted from tariffs if they can show that including them is hurting U.S. business or consumers.
The Canadian government is fighting on several fronts for an exemption: Foreign Minister Chrystia Freeland pressed Mr. Ross on the weekend and also sat down with a group of U.S. congressmen led by Kevin Brady, chair of the powerful House ways and means committee, at the Canadian embassy in Mexico on Sunday, government sources said. Ms. Freeland meets on Monday with U.S. Trade Representative Robert Lighthizer during renegotiations of the North American free-trade agreement in Mexico City.
Ontario Premier Kathleen Wynne, whose province is at the centre of the Canadian steel industry, was spending Sunday and Monday calling trade-friendly U.S. governors and asking them to lobby the administration on Canada's behalf, one Queen's Park source said.
And Finance Minister Bill Morneau said he had spoken with U.S. Treasury Secretary Steven Mnuchin, a more moderate member of the administration.
British Prime Minister Theresa May also expressed "deep concern" over Mr. Trump's plans in a phone call with him on Sunday, according to a Downing Street summary of the conversation.
Canada has a host of allies south of the border fighting on its behalf. Mr. Brady said Sunday that "all fairly-traded steel and aluminum" – including from Canada and Mexico – should be exempted from tariffs. U.S. Defence Secretary James Mattis has also argued that steel tariffs should spare U.S. allies.
The U.S. and Canadian steel and aluminum industries are heavily integrated, with major U.S. players owning portions of both, including Alcoa and Stelco.
Jean Simard, president of the Aluminium Association of Canada, said the United States's "contemptuous" attitude would make the country uncompetitive by driving up the prices of its products. "It's going to get dirtier before it gets better. I think we're looking at a possible all-out trade war, including Canada, Europe, Asian countries," he said in an interview.
Other industry players said that, notwithstanding the verbal broadsides of Mr. Navarro and Mr. Trump, there was still hope.
"I don't know that the comments [Sunday] necessarily change much, in that we're going to continue as an industry and in partnership with the government to push for an exemption or an exclusion to these measures," said Joseph Galimberti, president of the Canadian Steel Producers Association.
With a report from Paul Waldie in London