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Trump’s U.S. trade beef isn’t with Canada, Trudeau says

Click to play video '‘U.S. isn’t overly preoccupied with Canada’: Trudeau on U.S. trade' ‘U.S. isn’t overly preoccupied with Canada’: Trudeau on U.S. trade
Prime Minister Justin Trudeau said that the new U.S. administration "isn't overly preoccupied with Canada" when it comes to their protectionist trade rhetoric – Jan 25, 2017

Prime Minister Justin Trudeau took some time during his cross-country tour on Wednesday to reassure people that U.S. President Donald Trump‘s trade beef isn’t with Canada.

“The administration has made it very clear, both to us and publicly, that they are not overly preoccupied with Canada in terms of much of their protectionism and much of the rhetoric they’ve put out,” Trudeau said at a news conference in Saskatoon.

“They actually have emphasized to us that the trade relationship with Canada is a good one, is a balanced one, is one that they value and one that they understand is good for not just the northern states but many states across the United States.”

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It would be “almost impossible to imagine any increasing of barriers” between the U.S. and Canada when so many products flow back and forth across the border every day, he said.

Trudeau’s remarks came in a week that Trump and his staff took their places in the White House.

Trump said Sunday that he is planning imminent talks with Canada and Mexico about renegotiating the North American Free Trade Agreement (NAFTA).

READ MORE: Canada could benefit from revamping NAFTA, expert says

At least one expert said Canada could benefit from these talks.

Canada has been a great partner of the United States for as long as anyone can remember,” Stephen Schwarzman, who chairs the President’s Strategic and Policy Forum, told Global News this week.

“Things should go well for Canada in terms of any discussions with the United States.”

President Donald Trump shows his signature on an executive order on the Keystone XL pipeline, Tuesday, Jan. 24, 2017, in the Oval Office of the White House in Washington.
President Donald Trump shows his signature on an executive order on the Keystone XL pipeline, Tuesday, Jan. 24, 2017, in the Oval Office of the White House in Washington. AP Photo/Evan Vucci)

Precisely what will happen vis-a-vis NAFTA remains unclear. Trudeau said on Wednesday that his priority is to “highlight just how many good jobs on both sides of the Canada-U.S. border depend on the smooth and free flowing of goods and services back and forth across our borders.”

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He noted that Canada has informed the administration about how much of the American economy is “tied up in successful trade with Canada.”

“We have 35 states in which their number one export destination is Canada and that highlights the fact there are a lot of conversations to have,” Trudeau said.

This chart shows how much money Canada and the U.S. have invested in each other since 2007.
This chart shows how much money Canada and the U.S. have invested in each other since 2007. TD Economics

report released by TD senior economist Brian DePratto on Tuesday gave some sense of what could happen in NAFTA negotiations.

“Rules of origin” are likely to be a focus of the talks, with discussion of more stringent requirements around how much of a product has to be made in a NAFTA country in order to avoid tariffs.

A light vehicle such as a family van currently has to be made up of 62.5 per cent NAFTA content in order to cross the U.S.-Canada border without facing any tariffs.

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READ MORE: Protecting Canada from a U.S. border tax could lie in NAFTA negotiations: Trump adviser

Negotiations might see this requirement rise to 75 per cent NAFTA content — and if a van didn’t meet that requirement, it could face a tariff when crossing the border into the U.S.

DePratto predicted that some industries, like oil, would see little impact from any new rules negotiated in NAFTA talks.

Manufacturers, however, could be more subject to any new regulations.