Returning to his bellicose trade rhetoric, U.S. President Donald Trump warned Friday that he would cause the “ruination” of Canada if he imposed tariffs on Canadian-made cars.
Trump issued the threat as North American Free Trade Agreement talks continued in Washington without a deal. He has repeatedly threatened to hit Canada with the auto tariffs if Prime Minister Justin Trudeau does not make concessions, though he has never before used such dire language.
On Air Force One on his way to a Republican fundraising event in North Dakota, Trump said, “Canada has been ripping us off for a long time. Now, they’ve got to treat us fairly.”
“I don’t want to do anything bad to Canada. I can — all I have to do is tax their cars, it would be devastating. If I tax cars coming in from Canada, it would be devastating,” he continued, according to a pool reporter travelling with him.
Trump’s rhetoric escalated further in the North Dakota speech. After saying he is “working on a deal with Canada,” he said, “We cannot continue to get ripped off like we’ve been ripped off before.”
“Actually, on some countries, including Canada, a tax on cars would be the ruination of the country,” he said. “That’s how big it is. It’d be the ruination of the country. Now, they’ve taken advantage of us for many decades. We can’t let this happen anymore. We have a country to run.”
Trump made clear, as he has before, that he sees the auto tariff threat as an effective tool in trade talks. He claimed that whenever he threatens such tariffs, negotiators from other countries surrender to his desires: “We’ll do it! We’ll do it! We’ll agree! We’ll agree!”
The threat has not been that effective with Canada till date.
Canadian economists do not think U.S. auto tariffs would “ruin” Canada, but they have predicted a major economic hit. A TD Economics analysis in June forecast a job loss of 160,000, almost all of them in Ontario. Scotiabank said the tariffs could reduce Canadian growth by more than a quarter.
Trudeau’s government warned in July that it would retaliate against any auto tariffs from Trump. Canada has numerous U.S. allies on the issue: Trump’s proposal to use a “national security” law to impose tariffs on foreign cars has been opposed by every major segment of the U.S. auto industry, from domestic automakers to dealership owners.
Canadian officials sent pessimistic signals on Friday about the possibility of an imminent deal with the U.S. on NAFTA.
Post an early-afternoon meeting with U.S. Trade Representative Robert Lighthizer, Foreign Affairs Minister Chrystia Freeland continued to describe the talks as constructive but continued to provide no details. Freeland left open the possibility of another meeting later on Friday.
The talks will likely be paused at least briefly if a deal is not reached by Saturday. Lighthizer, Trump’s top trade official, is scheduled to attend meetings in Europe on Monday and then in Argentina later in the week.
There is no immediate deadline pressure on the two sides. The next date of importance is the end of the month: Trump could theoretically abandon talks with Canada and proceed with his deal with Mexico alone as early as the beginning of October.
Freeland has declined to identify the issues standing in the way of a deal. Trump’s top economic adviser, Larry Kudlow, claimed Friday that the problem was Canadian inflexibility on dairy.
“The United States would rather have a trade deal with Canada, but it has to be a good deal, right. And the word that continues to block the deal is M-I-L-K,” Kudlow said on Fox Business. “I’m just saying: let go — milk, dairy, drop the barriers, give our farmers a break, and we can fix some other things.”
Trudeau said earlier in the week that he would be willing to give incremental ground on dairy, while preserving Canada’s protectionist supply management system, if the U.S. were willing to make its own concessions.
A Canadian official who spoke on condition of anonymity on Friday said the dairy issue is indeed one of the matters that has not been resolved. But the official said there are other unresolved issues, too, including Trudeau’s two key recent demands.
Trudeau said this week that his “red lines” are the preservation of the “Chapter 19” dispute resolution system, which allows Canada to challenge U.S. duties at an independent panel rather than in U.S. courts, and the preservation of the “cultural exemption” that allows Canada to favour Canadian music, movies and television, among other cultural products, over U.S. competitors.