Canada hoping its tariff threat will prompt USA back down

Posted June 06, 2018

"The idea that Canadian steel that's in military vehicles in the United States, that makes your fighter jets is somehow now a threat ... the idea that we are somehow a national security threat to the United States is quite frankly insulting and unacceptable", Trudeau said.

The tariffs have landed just as Morneau presides over a G7 finance ministers' meeting in Whistler, B.C., where the event's pre-set agenda has been overtaken by talk of protectionism and fears of a protracted trade war.

Trudeau and his G7 partners have criticized Trump's administration for protectionist practices they say will hurt economic growth in the long term.

The tariffs, which prompted retaliatory measures from Canada and others, threaten to drive a wedge into the G7, fracturing the long-standing multilateral relationship into something observers describe as a "G6 plus one", with the U.S.as the outlier.

"For 150 years, Canada has been America's most steadfast ally", he stressed, noting that these tariffs will harm industry and workers on both sides of the Canada-U.S. border.

Canadian Prime Minister Justin Trudeau questioned the reasons behind the new US tariffs on Canadian goods, saying he was "having a lot of trouble" understanding the idea that the United States viewed his nation as a national security threat.

USA and Chinese trade delegations met on Saturday and Sunday for the third round of discussions on current trade tensions between the two countries.

On Thursday, Canadian Prime Minister Justin Trudeau said he had offered to meet with Trump this month to finish negotiating a NAFTA deal.

That all changed Thursday when Canada, along with Mexico and the European Union, lost exemptions to the USA metal tariffs. Canada has responded to the tariffs with retaliatory dollar-for-dollar "countermeasures" on up to $16.6 billion worth of American imports. "We still have a few days to take the necessary steps to avoid a trade war between the European Union and the US", French Finance Minister Bruno Le Maire said after a meeting of G-7 finance ministers and central bank governors in Whistler, British Columbia.

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"Clearly, that is going to be a hard discussion", he said.

Mr. Mnuchin denied the US was left outside the consensus on all matters, and insisted Washington is playing a central role in the group: "I don't think in any way the U.S.is abandoning its leadership in the global economy", Mr. Mnuchin said.

Addressing the EU's decision to launch counter-tariffs on a variety of USA products towards the end of June, Dr Fox refused to say whether the United Kingdom would back them.

U.S. Treasury Secretary Steven Mnuchin failed to soothe the frustrations of his Group of Seven counterparts over the 25 percent steel and 10 percent aluminium tariffs that Washington imposed on Mexico, Canada and the European Union this week.

"American distributors see they can take advantage of what's going on because of tariffs going on Canadian suppliers", he said.

Dr Fox welcomed the European Union's decision to take the matter to the World Trade Organisation, but raised fears that it could be hard for the WTO to act.

Prime minister Justin Trudeau told a news conference the USA tariffs were "totally unacceptable". The E.U. and Canada also opened cases against the USA with the World Trade Organization related to attribution of national security threats.

Kudlow acknowleged that the dispute over trade could jeopardize a U.S. economy that is now "clicking on all cylinders", with surging growth and low unemployment.

The director of the National Economic Council, Larry Kudlow, has said that Trump is considering negotiating separate trade agreements with Mexico and Canada. The official said a range of issues remain to be resolved but the USA looks forward to continuing the negotiations with Canada.