Canada will take the harshest blows if U.S. President Donald Trump
slaps heavy tariffs on foreign imports of steel and aluminum, but any
temptation to suspend NAFTA talks in retaliation should be avoided,
Canada’s former chief negotiator on the trade agreement said Friday.
Putting the NAFTA negotiations on hold pending a resolution of the dispute over
steel tariffs would give the U.S. an excuse to wash its hands of the
agreement altogether, said John Weekes, Canada’s former WTO ambassador
and chief negotiator on the original deal.
“I think, quite frankly, we are on the brink of a trade war if Trump goes through with
this,” Weekes said in an interview. “But we don’t want to make it easier
for him to walk away from NAFTA and if we leave the table, that’s
exactly what we’ll do.”
Any hopes that Canada would be exempted
from Trump’s proposed tariffs of 25 per cent on steel and 10 per cent on
aluminum were derailed Friday by U.S. Commerce Secretary Wilbur Ross.
“Of the options that I presented, the president chose one — which was put
broad tariffs on all products from all countries,” Ross said in
interview on Bloomberg TV. “We have to deal with a global problem on a
global basis.”
A list (of retaliatory measures) can get things moving and I do think we’re at a
point now where we need to do something. Of course, we risk a situation
where we give them a bloody nose and they break our arm
The threats from the U.S. prompted a sharp response yesterday from
World Trade Organization director general Roberto Azevedo, who cautioned
that “a trade war is in no one’s interests.”
“The WTO is clearly concerned at the announcement of U.S. plans for tariffs on steel and
aluminum,” Azevedo said in a brief statement issued by the WTO. “The
potential for escalation is real, as we have seen from the initial
responses of others.”
Jerry Dias, head of Canadian private-sector
union Unifor, said Trump’s latest gambit to push his “America First”
strategy had immediately soured the NAFTA negotiations under way in
Mexico City and enfuriated the Canadian team.
“It is crystal clear to us that if Canada is not exempted from the U.S. tariffs on Tuesday,
then Canada should walk away from the NAFTA table,” Dias told Reuters,
likening the Trump administration to a “schoolyard bully.”
“Ultimately Canada’s going to have to start fighting fire with fire,” he said.
Foreign Affairs Minister Chrystia Freeland has said Canada will “take
responsive measures to defend its trade interests and workers.” But
trade experts are divided on just how much Canada, as a market of 35
million people, can push back against the U.S.
Canada is clearly more dependent on its trade relationship with the U.S. than the other
way around, Weekes said. Canada is the top exporter of steel products to
the U.S., accounting for 16.1 per cent of all foreign steel entering
the country. And more than 75 per cent of all Canadian exports cross the
border into the vast U.S. market of 350 million people.
Still, there are ways Canada can influence officials south of the border,
including by drawing up a “retaliation list” of American exports that
Canada would levy in response to the steel tariffs, Weekes said.
“A list like that can get things moving and I do think we’re at a point
now where we need to do something,” he said. “Of course, we risk a
situation where we give them a bloody nose and they break our arm.”