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Canada Warns U.S. on Raising Import Tariffs Ahead of NAFTA Renegotiation

Monday, February 13, 2017
Sandler, Travis & Rosenberg Trade Report

As the U.S., Canada, and Mexico begin preparing for a renegotiation of NAFTA that could get underway this spring, Canadian officials are signaling that while they are open to changes they also intend to staunchly defend the country’s interests.

President Trump has threatened to withdraw the U.S. from NAFTA if it is not revised (though there has been little concrete information as to what specifically the U.S. may push for) and to impose new tariffs on all U.S. imports as part of an effort to aid the U.S. manufacturing sector. Foreign minister (and recent trade minister) Chrystia Freeland responded last week after meeting with U.S. lawmakers in Washington that Canada “would be strongly opposed” to such tariffs because they would be “mutually harmful.” She also warned that “if such an idea were ever to come into being, Canada would respond appropriately.”

However, senior Canadian officials have been visiting with Trump administration officials and congressional leaders to try to head off any conflict, pointing out that the two countries have a fairly balanced trading relationship and comparable labor, environmental, and other standards. Prime Minister Justin Trudeau may make similar arguments when he meets with Trump at the White House Feb. 13.

In the meantime Ottawa is consulting with private sector interests to gauge their priorities and start establishing negotiating positions. “The best defense is a strong offense,” Freeland said, “and Canada definitely will be and is good at taking strong offensive positions.” According to press sources, a majority of Canadians responding to a recent poll indicated support for an assertive approach to trade with the U.S.

For more information on preparing your business for NAFTA or other trade-related changes, click here.

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