OTTAWA, March 7 (Reuters) - Canada is sticking to its keep-calm strategy as U.S. President Donald Trump ramps up trade war rhetoric, convinced that no move is the best move for the country with the most to lose, but critics say it risks being a soft target if its strategy fails.
While the European Union immediately drew up a list of U.S. products from bourbon to blue jeans to hit if Trump follows through on a plan to impose global duties on aluminum and steel, Canada has gone with equivocation.
“We’re making sure we take all discussions around trade with the United States in a measured way,” Finance Minister Bill Morneau said on Tuesday.
“From our perspective the way to deal with a partner, to deal with our neighbor, is to be constructive. We’re going to continue to be strong allies of the United States, we’re going to continue to be neighbors, and we’re taking that as our frame to negotiate for a better outcome.”
From the outset, Prime Minister Justin Trudeau has taken a decidedly sunny approach to the unpredictable president, launching an outreach campaign to save NAFTA one encounter at a time with as many U.S. lawmakers, governors and administration officials as possible.
The Liberal government’s approach is largely backed across the political and business spectrum but pressure is building to abandon the measured tone.
“Trump has already treated China and Russia with more kid gloves than us. Why is that?” said John Weekes, Canada’s chief negotiator for the original NAFTA deal.
Weekes said Canada should draw up a long list of possible targets for retaliation, and publish it for public comment in a bid to ramp up U.S. concern about the pain of a trade war.
“I’d be the first to agree that retaliation is a mug’s game, but how do we help our allies in the United States make the case to change the course of policy?” he said.
Labor too, is demanding more action.
Jerry Dias, president of Canadian private-sector union Unifor, said the government’s keep-calm approach had been the right one up until Trump’s planned steel tariffs. Canada should walk away from the NAFTA table if it is not exempted from the tariffs, he said, and put tariffs on U.S. steel exports in kind.
“There comes a time where you have to say ‘enough is enough’ because the U.S. does not want to deal, that is crystal clear,” he said.
A source familiar with Canadian government thinking said retaliatory measures were “a live conversation going on at this moment” and would be deployed if the tariffs are implemented. Trump has linked the tariffs with ongoing NAFTA negotiations.
Beyond the divide-and-conquer strategy of the outreach tour in the United States, those close to the trade file say that dealing with Trump brings its own imperatives.
“We have to keep calm. It’s pointless talking in public about the ways you might retaliate until you have to act,” said a second source familiar with the issue who spoke on the condition of anonymity.
“As for people who stomp around and say ‘We will strike back’ – why would you do that? It just irritates the president.” (Additional reporting by Leah Schnurr in Ottawa and David Ljunggren in Mexico City Editing by James Dalgleish)