POLITICS
02/19/2019 21:34 EST | Updated 02/19/2019 21:35 EST

Canada's Strategic Tariffs Rub Some U.S. Officials The Wrong Way: David MacNaughton

Canada's retaliatory "countermeasures" hit products in states where U.S. President Donald Trump prevailed during the 2016 election.

Canada's Ambassador to the United States David MacNaughton attends a business luncheon in Montreal on Nov. 16, 2016.
Graham Hughes/CP
Canada's Ambassador to the United States David MacNaughton attends a business luncheon in Montreal on Nov. 16, 2016.

OTTAWA — Americans are complaining about the pain caused by Ottawa's retaliation against the Trump administration's steel and aluminum tariffs, Canada's ambassador to the United States says.

David MacNaughton was referring to Canada's imposition of $16.6 billion in retaliatory tariffs on American imports last year after President Donald Trump used a section of U.S. trade law to impose tariffs of 25 per cent on Canadian steel and 10 per cent on aluminum. Mexico was also hit with the U.S. tariffs, and has also imposed its own punitive duties.

"Canada and Mexico have done some strategic retaliation, which is causing some anxiety in some important states," MacNaughton said Tuesday at a conference on trade hosted by the Canadian Global Affairs Institute in Ottawa.

"I hope we can get the steel and aluminum tariffs off because it's causing huge tensions between our two countries and it's unnecessary."

Matthew Usherwood/CP
David MacNaughton in Ottawa on Feb. 5, 2018.

The Canadian "countermeasures" hit products in U.S. states where Trump prevailed to win the presidency in 2016.

They targeted a wide range of goods, including ketchup from Pennsylvania, bourbon from Kentucky, orange juice from Florida, toilet paper from Wisconsin and Ohio and panels for circuit breakers and fuses from Michigan.

"I saw one of the senators the other day, and he said, 'I'm really concerned about the retaliation; you're hitting some of the products that are grown in my state,' " MacNaughton said.

"And I said, 'Oh, that's purely by accident, Senator, we'd never do that deliberately.' "

The remark sparked muted laughter among some attendees.

MacNaughton said he was optimistic about the possibility about getting the tariffs lifted. He predicted this would inevitably occur the same way Canada overcame its differences with the protectionist Trump administration to get a newly negotiated North American free-trade agreement last fall: by continuing to lobby U.S. lawmakers.

MacNaughton recalled being approached by two U.S. senators, a Republican and a Democrat, late last summer to discuss the stalled renegotiation of the North American Free Trade Agreement.

I saw one of the senators the other day, and he said, 'I'm really concerned about the retaliation; you're hitting some of the products that are grown in my state.' And I said, 'Oh, that's purely by accident, Senator, we'd never do that deliberately.'David MacNaughton

The Mexicans had struck their own deal with the U.S. and the clock was ticking on a Sept. 30 deadline imposed by Trump to get a deal with Canada.

MacNaughton said it led to him hosting a dinner for 15 U.S. lawmakers.

"They heard the word from the administration about what our position was. I was trying to explain to them how we were much more flexible than that — that there were some really good things in the negotiations that we were trying to push for," MacNaughton recalled. "I think that they helped at least nudge the administration into a position where they were much more flexible, and much more reasonable in the last three or four weeks of the negotiations.

"We're trying to do the same thing right now with steel and aluminum."

Foreign Affairs Minister Chrystia Freeland has been pushing the Americans for the alleviation of the so-called Section 232 tariffs, including this past weekend at a major international security summit in Munich, Germany, during meetings with the new U.S. House Speaker, the veteran California Democrat Nancy Pelosi.

"We spoke a lot about the (Section) 232 tariffs on steel and aluminum and I explained why Canada is so strongly opposed to them and why Canada believes they must be lifted. We also spoke about the Canadian retaliation and heard that that is indeed having an impact," Freeland told reporters on the weekend from Munich.

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Freeland also said she pushed the powerful Republican who heads the Senate finance committee, Chuck Grassley of Iowa, during a meeting earlier this month in Washington.

"Sen. Grassley has raised in public the notion that the president has used these tariffs as a form of leverage for trade negotiations," said Freeland. "But I did explain to Sen. Grassley the Canadian position that now that we have concluded our trade negotiations with the United States that is all the more reasons why these tariffs ought to be lifted and that this is a very important concern for Canada."

MacNaughton said his latest conversations with newly elected Democratic lawmakers lead him to believe that there will be no serious opposition to the new trade agreement in Congress. He said he's confident that "side letters" will ensure the enforcement of labour standards in Mexico, a U.S. priority.

"I've spoken to a lot of the Democrats and I know there's an awful lot of things in the news about maybe the agreement's in trouble," he said Tuesday. "I think when it comes to an up-or-down vote, I think Congress will pass it."

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