Canada looks to ride out Trump trade storm

Canadian Prime Minister Justin Trudeau addresses a press conference at the conclusion of the G7 summit in La Malbaie, Quebec, on Jun 9, 2018. (AFP/Lars Hagberg)

Trudeau struck a steady-as-he-goes pose after Trump's latest dig, telling reporters, "I'm going to stay focused on defending jobs for Canadians and supporting Canadian interests."

And Foreign Minister Chrystia Freeland, who is traveling to Washington on Wednesday to try to salvage the North American Free Trade Agreement, also emphasised the need for calm.

"From day one, we have said that we expected moments of drama and that we would keep calm and carry on throughout this drama," she said.

But a source close to Trudeau told AFP Canada was "prepared for all eventualities."

"If the US decides to apply new tariffs, Canada will be ready," the official said.

Bitter differences over trade dominated the summit Trudeau hosted over the weekend, with leaders of the world's largest economies lining up against Trump's threats to impose stiff tariffs on imported steel and aluminium.

An angry Trump refused to sign a joint statement issued at the end of the summit, and he and his top aides assailed Trudeau, accusing him of dishonesty and betrayal.

Trudeau had said using national security as a justification for tariffs was "kind of insulting" to Canadian veterans who had stood by their US allies in conflicts dating back to World War I.

"Canadians are polite and reasonable but we will also not be pushed around," he said.

And he confirmed that Canada would press ahead with dollar-for-dollar retaliatory tariffs on Jul 1 as previously announced.

Trudeau, Trump told ABC News, "shouldn't have done that. That was a mistake."

The bust-up has sent relations between the US and Canada, historically the closest of allies and trading partners, to a new low.

On Tuesday, Trump barely let up, telling reporters in Singapore, after his summit with North Korea's Kim Jong Un, that while the G7 summit was "good" Trudeau's critical comments would cost Canada "a lot of money."

The only hint of a softening came when Peter Navarro, the White House economic advisor, apologized for saying there was a "special place in hell" for Trudeau.

"I used language that was inappropriate," Navarro was quoted as saying at a Washington event organised by The Wall Street Journal.

'FOCUS ON FACTS'

Trump, meanwhile, renewed his criticisms of Canada's protection of its dairy sector, saying: "It's very unfair to our farmers, and it's very unfair to the people of our country."

"We need to focus on the facts," and recall that Washington protects its industries too, a senior Canadian official said, pointing to US agricultural subsidies.

"The important thing for the Americans to understand is that our economies and industries are highly integrated" and that tariffs would be very bad for both sides, said the official, speaking on condition of anonymity.

Canadian politicians of all stripes have rallied around Trudeau, unanimously passing a motion Monday supporting the prime minister and denouncing Trump's personal attacks on him.

It is unfortunate that there is now "so little trust" in this most important relationship, commented University of Montreal professor Frederic Merand.

"Donald Trump can, quite unpredictably, decide to blow up one aspect of the relationship or another," he told AFP, explaining that Canada had long worked to deepen ties with the occupant of the White House, but also with lawmakers in Washington and in key states, and with business leaders.

Canada's economy is heavily reliant on free trade with the United States, with some 75 percent of its exports going to its southern neighbor. Significant foreign investment in Canada is also linked to its access to the US market.

Although Trump has repeatedly insisted that US workers have lost out under the North American Free Trade Agreement, the US Trade Representative's office confirmed the trade surplus falls more than US$8 billion in Washington's favor.

Freeland said she had a "good conversation" Sunday with US Trade Representative Robert Lighthizer, and that the pair would try to meet in Washington this week.

Canada, she said, is still seeking a "win-win-win" NAFTA deal, while adding that Ottawa will remain "absolutely resolute in defense of the national interest."

"From the beginning we have said that our approach would be to work for the best possible outcome but to always be prepared for the worst, to have backup plans," she said.