Canada will impose retaliatory tariffs on C$16.6 billion (£9.6 billion) worth of USA exports and challenge US steel and aluminium tariffs under the North American Free Trade Agreement and the World Trade Organization (WTO), Canadian Foreign Minister Chrystia Freeland said on Thursday. Last week, The Trump administration announced an investigation into whether automobile imports are hurting USA national security, laying the groundwork for another trade fight.
A steel processing facility in San Luis Potosi, Mexico.
But the U.S.is pressing ahead nonetheless, a long-threatened tactic sure to cast a pall over the G7 summit Prime Minister Justin Trudeau is hosting next week in Quebec.
On the campaign trail, Trump repeatedly accused China of trading unfairly and contributing to the hollowing out of America's manufacturing sector.
Washington had granted Canada and Mexico an exemption on the metals tariffs to give the parties time to successfully renegotiate the 1994 continental trade pact.
"World trade is not a gunfight at the OK Corral", Le Maire quipped, referring to a 1957 western movie. "The idea that America's closest allies represent a threat to its national security is absurd". It largely spares US farmers.
U.S. Commerce Secretary Wilbur Ross said the decision was based on the lack of progress in the ongoing NAFTA talks.
"By targeting those who are not responsible for over capacities, the U.S. is playing into the hands of those who are responsible for the problem", said Juncker. According to Juncker, "The US now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the US".
The steel decision will sharpen the tone of talks between Group of Seven finance ministers and central bankers this week in Whistler, Canada.
American allies have argued they should be exempt from the tariffs aimed mainly at China, which is largely blamed for flooding the market with cheap products and pushing down global prices.
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"The leaders expressed their strong concerns and deep disappointment with the imposition of USA tariffs on Canadian and Mexican steel and aluminum exports", Trudeau's office said in a summary of the phone call with the Mexican leader.
Now they put their noses to the grindstone and get back to the North American Free Trade Agreement.
Trudeau spoke with Trump by phone earlier this week.
"It is not every day that a Canadian head of government pointedly notes that he is dealing with a U.S. administration that is short on common sense" or "that a prime minister uses a news conference to dig in his heels in a trade negotiation", she noted.
"This really poisons the talks on Nafta 2.0", said Tucker.
Canada, Mexico, and the European Union are widely expected to retaliate.
In the longer term, the US likely faces months and possibly years of litigation at the World Trade Organization.
A press release from Canadian Chamber president Perrin Beatty stated that "We need to act vigorously to support our domestic industries, and to send a message to the U.S. Administration that their unilateral protectionist measure will not come without a serious cost to them".
Trump imposed the tariffs of 25 percent on steel and 10 percent on aluminum using a national security justification, which Ross said encompasses a broad array of economic issues.