Canada stunned and worried about Trump trade threats
TORONTO (AP) — It started with President Donald Trump's attacks on Canadian dairy farmers. Then Washington slapped tariffs on Canadian steel, citing national security. There was that disastrous G-7 summit in Quebec. Now it's a new North American free trade agreement that excludes America's northern neighbor.
Canadians are stunned by the repeated broadsides from what has long been their closest ally and some have even begun boycotts.
"Everybody is afraid," said Margot Lajeunesse, who helps run a family-owned bistro in Quebec. "We depend a lot on the U.S."
About 75 percent of Canada's exports go to the U.S. so the tariff threat looms large after Trump snubbed Canada and reached a preliminary deal with Mexico.
To intensify the pressure on Canada, Trump threatened this week to impose new taxes on Canadian auto imports if Canada didn't negotiate "fairly." Canada must now decide whether to sign onto an agreement it didn't negotiate, or risk that the U.S. and Mexico will make good on threats to do a two-way deal that excludes it.
Canada could lose 60,000 jobs in a trade war and take a 1 percent hit to its GDP — a significant drop because Canada's economy is projected to grow just 2 percent next year, according to estimates from the C.D. Howe Institute, a Toronto-based think tank.
Canada had been left out of the trade talks for the past five weeks, but Trudeau said there was still a "possibility of getting to a good deal for Canada" by Trump's deadline of Friday.
"But," he added, "as I've said all along it has to be the right deal for Canada. We will not sign a bad agreement."
Trump expressed optimism Wednesday that a deal could be reached.
"We gave until Friday and I think we're probably on track," Trump said. "We'll see what happens. I love Canada. And you know what, I love Mexico too. ... I like them both the same."
There is some optimism in Canada's automotive sector despite the Trump tariff threats.
Among other things, the U.S.-Mexico deal mandates that 40 to 45 percent of a car be made in a country with a minimum hourly wage for auto workers of at least $16 to qualify for duty-free status — a requirement that could stem the flow of auto-sector jobs to Mexico, where auto workers earn on average just $5 an hour.
"This should stop the bleeding in Canada," said Jerry Dias, president of Unifor, Canada's largest private-sector union.
Bank of Montreal chief economist Douglas Porter said the U.S. deal with Mexico leaves Canada in a near take-it-or-leave-it situation. Still, he noted investors have welcomed the news and that helped push the Canadian dollar up 0.5 percent. Stocks of Canadian auto parts companies were up too.
"Perhaps the clearest indicator that the market is viewing the U.S.-Mexico deal as a positive for Canada is the strengthening of the Canadian dollar," Porter said.
Reaction in the Canadian press reflected the mixed feeling about the U.S.-Mexico deal.
"Canada scrambles as U.S., Mexico ink NAFTA pact," headlined the Globe and Mail, Canada's national newspaper.
The Toronto Star had a different take. "PM cool in the face of Trump's NAFTA heat," it read.
Canadian Foreign Affairs Minister Chrystia Freeland hurried to Washington this week to try to repair the damage and was in talks Wednesday with U.S. Trade Representative Robert Lighthizer and other U.S. officials.
"Mexico has made significant concessions which will be really good for Canadian workers. On that basis we are optimistic," Freeland said of the talks.
But the opposition Conservative Party accused Trudeau of mishandling negotiations by letting Mexico and the United States cut a deal without Canada.
"Canada is on the outside looking in while Canadian jobs hang in the balance,"
Conservative Leader Andrew Scheer tweeted. Foreign-affairs critic Erin O'Toole said in a statement that "Mexico has usurped our role as the key U.S. trade partner."
Still, the ties between the U.S. and Canada are without parallel anywhere in the world. Trade between the two neighbors totaled an estimated $673.9 billion in 2017, with the U.S. enjoying a nearly $3 billion surplus with Canada. Each day, about 400,000 people cross the world's longest international border. There is close cooperation on defense, border security and law enforcement, and a vast overlap in culture, traditions and pastimes.
Trudeau's father, the late Prime Minister Pierre Trudeau, offered this take on sharing a continent with the United States. "Living next to you is in some ways like sleeping with an elephant," he said. "No matter how friendly and even-tempered the beast, one is affected by every twitch and grunt."
Perhaps the younger Trudeau had his father's words in mind when he asserted that he wouldn't let Canada get pushed around by the U.S. at a news conference at the end of the contentious G-7 summit in June — a remark that enraged Trump.
"He made this point that he's going to make Canadians pay," said Nelson Wiseman, a political science professor at the University of Toronto.
University of Toronto professor Robert Bothwell said the latest trade deal excluding Canada shows Trump is more focused on exerting American economic might than reaching a fair deal with friends.
"This is going to have a horrendous impact on Canada-American relations," Bothwell said. "Canada may well have to give in to this because of the threat to the auto trade, but it's going to leave a very bad taste."