OTTAWA—U.S. President Donald Trump called the North American trade deal a “bad joke!” as he made an oft-repeated threat Thursday to force Mexico to pay for a border wall.

“The Wall will be paid for, directly or indirectly, or through longer-term reimbursement, by Mexico,” Trump wrote in a tweet in which he slammed the trade imbalance between Mexico and the United States. “The $20 billion dollar Wall is ‘peanuts’ compared to what Mexico makes from the U.S. NAFTA is a bad joke!”

Two hours later, Trump threatened, “If there is no Wall, there is no Deal!”

In Toronto for meetings with Finance Minister Bill Morneau, Mexico’s Secretary of Finance and Public Credit Jose Antonio Gonzalez Anaya retorted Mexico’s position is equally clear — there can be no deal if the U.S. insists on payment for a wall. He told reporters it is an “issue of national sovereignty and dignity.”

With the next round of NAFTA talks looming in Montreal, Canadian officials are increasingly concerned about the U.S. agenda.

One government source said the White House may be looking to claim a collapse of NAFTA talks as a “victory” — however hollow — and vindication of Trump’s claim that trade deals are “unfair” to the U.S.

The senior Canadian official told the Star the hardened U.S. positions at the NAFTA table — or “poison pills” that U.S. negotiators put forth in the last two rounds — show “victory for them looks like getting us to walk away from NAFTA.”

However, the source said Canada will not walk away, and intends on remaining at the table with “whoever is there.”

Speaking on a background-only basis, the official added that in the past two weeks the president got “an earful” from U.S. agriculture industry leaders, state governors and senators about the benefits of NAFTA — arguments bolstered by last week’s stock market jitters over NAFTA uncertainty.

But few are making predictions about the outcome of the Montreal round.

Another senior government source said it is “hard to get clarity” on what the president’s intention on NAFTA is.

“I don’t think he’s made up his mind what he’s going to do. He’s looking for any signs of weakness,” said the insider.

Bank of Canada governor Stephen Poloz says uncertainty around NAFTA negotiations is impacting business investments in Canada. The central bank raised its key interest rate to 1.25 per cent on Wednesday, up from one per cent. (The Canadian Press)

It is possible, he suggested, the president would “make a splash” on NAFTA in the upcoming State of the Union address, but Trump could just as easily do that in a tweet.

Publicly, Canada is trying to keep calm and carry on.

Canada expects a larger presence of American trade association, industry representatives and business leaders at the Montreal talks.

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After meeting his Mexican counterpart in Toronto, Morneau said the federal government is still focused on “Plan A” — nailing a new North American free trade deal, and he declined to discuss what any Plan B looks like.

Nevertheless, federal Finance officials are mapping out which sectors of the Canadian economy would be hardest hit if, as seems increasingly possible, talks fail.

“We, of course, plan for every scenario,” said Morneau who downplayed the significance of his department’s analysis. “It’s the job of the Finance Department is to run models on everything.”

In consultations with Canadian business leaders, Morneau said he has simply urged them to make the case for NAFTA to the “other countries in this discussion.”

Canadian officials say the Montreal negotiations have been extended, and will start earlier and end later then previously scheduled.

Preliminary negotiations will start with discussions Sunday and Monday around financial services, energy, investment, textiles, procurement and agriculture.

The main negotiations start Tuesday and end the following Monday, Jan. 29, with the key government ministers from all three countries attending the final day in Montreal.

Foreign Affairs Minister Chrystia Freeland has said Canada is prepared to offer some “creative” thinking at the table about how to address U.S. demands, and on Thursday met in Toronto with her outside advisory council on the NAFTA talks.

Freeland was flanked by former Conservative interim leader Rona Ambrose, former Conservative cabinet minister James Moore, Canadian Labour Congress president Hassan Yussuf and Assembly of First Nations National Chief Perry Bellegarde, among others.

Freeland said Canada’s strength at the negotiating table is its “Team Canada approach.”

The U.S. hardened its position in the past two negotiating rounds, laying out demands for higher North American content overall in the auto sector and a guarantee that 50-per-cent would be U.S.-made content, and an automatic five-year termination of NAFTA if all three countries don’t approve it again. Both are non-starters for Canada and Mexico.

All the doom-and-gloom talk prompted a broad coalition of stakeholders in the Canadian agriculture & agri-food industry — which exports more than $31 billion to the U.S. and Mexico — to issue a statement urging negotiators to “do no harm.”

They said they support a new NAFTA “provided it upholds fair and free principles, preserves integrated supply chains across the continent. We urge negotiators to conclude negotiations as soon as possible for the stability of businesses across North America.”

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