Trump Threatens Auto Tariffs on Canada as Relationship With Trudeau Continues to Sour
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Trump warns he could cause the 'ruination' of Canada
The president said Friday that he does not want to "do anything bad to Canada." But he said he could devastate the country if he imposed auto tariffs.
WASHINGTON— 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 during another day of North American Free Trade Agreement negotiations that did not produce a deal between the U.S. and Canada. Foreign Affairs Minister Chrystia Freeland continued to describe the talks as constructive but provided no details.
Trump has repeatedly threatened to hit Canada with the auto tariffs if Prime Minister Justin Trudeau refused to make NAFTA concessions. He had never before spoken about ruining Canada, but it was not clear if the rhetorical escalation was a deliberate, meaningful shift or merely impromptu loose talk.
Trump began discussing Canada on his way to a Republican fundraising event in North Dakota. He told reporters on Air Force One: "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.
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In the North Dakota speech, 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 broaches such tariffs, negotiators from other countries surrender to his desires: "We'll do it! We'll do it! We'll agree! We'll agree!"
To date, Canada has not done so.
Canadian economists do not think U.S. auto tariffs would "ruin" Canada, but they have predicted a severe 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.
Canada exported $57 billion (Canadian) in automobiles and $15 billion in auto parts to the U.S. last year, according to Canadian data, more than four times the value of the steel and aluminum exports Trump has already subjected to tariffs.
Trudeau's government warned in July that it would retaliate against any auto tariffs. 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 automarkers to dealership owners.
Trump tariffs on Canada would directly harm the "Detroit Three" U.S. automakers. General Motors, Ford and Fiat Chrysler plants make up a major percentage of Canadian auto production.
Trump delivered the threat to Canada as he issued a separate trade threat to China. He told reporters that he had "another $267 billion" worth of tariffs on China "ready to go on short notice if I want," over and above the $200 billion he has suggested he will impose imminently.
Canadian officials sent pessimistic signals on Friday about the possibility of a rapid deal with the U.S. on NAFTA.
The talks will likely be paused at least briefly if a deal is not reached by Saturday. Robert Lighthizer, Trump's point man in the negotiations, 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 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.
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