MRO Magazine

Canada hoping its own tariff threat will prompt U.S. climbdown: Morneau

June 4, 2018 | By The Canadian Press

Whistler, B.C. – Finance Minister Bill Morneau says he’s hopeful the threat of retaliation against U.S. trade measures will convince the Trump administration to back down from the steel and aluminum tariffs it has imposed on its G7 allies.

The tariffs have landed just as Morneau presides over a G7 finance ministers’ meeting in Whistler, B.C., where the event’s pre-set agenda has been overtaken by talk of protectionism and fears of a protracted trade war.

Morneau said Friday that the federal government isn’t quite ready to discuss support or potential bailout packages for those Canadian sectors caught in the crossfire.

Instead, he argued, the focus now is to use the threat of retaliatory measures as a way to make the U.S. reconsider its own tariffs before any negative economic impacts actually materialize.


Ottawa’s response was a package of retaliatory tariffs that don’t go into effect until July, which in theory leaves plenty of time for U.S. President Donald Trump to reconsider his position.

“We’ve specifically put forth … countermeasures that demonstrate our view that this is unproductive, and we see that response as being a way to get us back to the table so the impacts actually don’t happen,” Morneau said Friday.

“Of course, we seek not to have these impacts happen by getting the United States to agree that these tariffs should be taken off.”

Canada isn’t alone in its fight: the U.S. measures also struck other G7 allies – and those partners have returned fire with potential tariffs of their own.

The European Union is also planning a tariff counter strike, and filed a request on Friday for consultations with the World Trade Organization. Bruno Le Maire, France’s economy and finance minister, argues it was necessary to avoid a G7 trade war.

“On trade, this is a G6 plus one,” Le Maire said Friday in Whistler, after stepping outside briefly from the talks.

“We have been attacked by those tariffs. We do not have any other choice but to respond. We would have preferred not to take that kind of decision.”

Le Maire said U.S. Treasury Secretary Steven Mnuchin wasn’t surprised when confronted about the tariffs inside the room. He hopes the discussion lays the foundation for successful talks during next week’s G7 leaders summit in Quebec’s Charlevoix region.

“We think that the G7 (meetings) will be useful if at the end of the G7 the United States is aware of the possible negative consequences of their decision on the unity of the G7 _ not only the economic unity, but also the political one,” he said.

Morneau has called the steel and aluminum tariffs “absurd” because Canada is by no means a security risk to the U.S. He warned the measures will destroy jobs on both sides of the border.

He said he used a private, bilateral meeting Thursday in Whistler to personally deliver that message to Mnuchin.

The finance minister declined to share details about how Canada’s argument was received by Mnuchin, but he predicted that some sparks would fly during Friday’s G7 talks.

“Clearly, that is going to be a difficult discussion.”

The combined response by G7 partners _ including the EU _ of imposing counter-tariffs could take away any argument that Canada is too small to intimidate the U.S. on its own, said one senior Canadian government official.

The official, who spoke on condition of anonymity due to the sensitivity of the situation, said Trump may have made a tactical error in targeting so many countries at the same time.

Ottawa, meanwhile, has been exploring financial assistance options for the steel and aluminum industry and its workers, similar what was done for the softwood lumber industry, the insider said.

Last year, the federal government offered $867 million in financial support to help lumber producers and employees weather the impact of punishing U.S. tariffs on Canadian softwood exports.

The source said the federal government’s list of retaliatory tariffs is made up of items that could be easily replaced by domestic suppliers or other countries – and is also designed to target U.S. states that will make the most noise in Congress.

During his news conference Friday, Morneau said: “Right now, we’re talking about how we can actually move forward with an approach that’s going to move back these tariffs for the benefit of Americans and the benefit for Canadians.”

Earlier this week, the U.S. tariffs immediately surged to the top of the G7 agenda in Whistler – and the issue is now positioned as the main priority for next week’s leaders’ summit.



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