Tough-talking Liberal cabinet ministers are delivering a collective message that Canada will "stay strong" to defend the country's interests in the face of escalating trade tensions with the United States.

The economic fallout from trade disputes is top of mind for ministers holding a two-day winter retreat in London, Ont., after Canadian stocks and the dollar fell Wednesday on reports the U.S. is increasingly likely to withdraw from NAFTA.

Foreign Affairs Minister Chrystia Freeland said today it's "no secret" the U.S. could signal its intent to withdraw from the agreement, since U.S. President Donald Trump has made that publicly known even before talks began.

She said the government takes the U.S. at its word, and is treating the threat seriously.

"Our approach from the start has been to hope for the best but prepare for the worst. So Canada is prepared for every eventuality," she said. "That is a whole-of-government operation."

Freeland said Canada will enter the sixth round of NAFTA talks, to be held in Montreal Jan. 23 to 28, with a spirit of good will, and says it's "absolutely possible" to have a positive outcome. Many of the bread-and-butter, business chapters are reaching a closing stage, and officials are developing new, creative ideas to respond to "unconventional" U.S. proposals, she said.

Withdrawal from NAFTA could take place six months after a country provides written notice of its intent.

But in an interview with the Wall Street Journal published Thursday, Trump said he would be "a little bit flexible" on the timeframe for when a NAFTA deal had to be struck because of the impending Mexican presidential election.

"I understand that a lot of things are hard to negotiate prior to an election," he told the newspaper. "They have an election coming up fairly shortly. I understand that makes it a little bit difficult for them."

Freeland insisted NAFTA talks are on a separate track from the ongoing dispute with the U.S. over softwood lumber.

Global Affairs Minister Chrystia Freeland spoke to reporters before a cabinet meeting in London 1:53

Softwood lumber dispute

This week, Canada launched a wide-ranging, 32-page complaint to the World Trade Organization (WTO) against the U.S., challenging American anti-dumping and anti-subsidy duties.

International Trade Minister Francois-Philippe Champagne said Canada will remain solution-oriented and constructive in its trade talks, but said the WTO complaint sends a clear message of "firmness" in Canada's approach.

"I think the American colleagues also understand when you stand strong and sending a message that says we will stand up for the forestry industry, we will stand up for our aerospace industry, we'll stand up for Canadian workers," he said. "You get respect. When people see that you're firm, you get respect."

Standing firm

Champagne said taking a strong stand is what the public expects.

"They want their Canadian government to stand firm. They want to engage, they want us to be constructive, but they want us to also be standing firm to defend Canadian workers, the forestry industry in particular, the aerospace industry have been subject to unfair duties and this is sending a message and I think it's important we will be there to defend obviously, our workers."

As Canada prepares for a possible U.S. pullout from NAFTA, it will continue an aggressive outreach plan that includes meetings with state governors and lawmakers in Washington.

But the potential financial fallout was flagged in the markets yesterday, where stocks dropped and the Canadian dollar weakened with reports of heightened uncertainty over the fate of NAFTA,

Finance Minister BIll Morneau wouldn't speculate on outcomes, but he insisted any agreement must be in Canada's best interests.

"I know what we are trying to achieve is improvement in NAFTA. I know that's better for Canada and we'll continue down that path," he said.

United front

Deputy Conservative Leader Lisa Raitt told CBC News Network's Power & Politics that there is no room for domestic partisan politics when it comes to renegotiating NAFTA.

"We are going to Washington to show that Canadians speak with one voice when it comes to the important matter of trade with the United States," she told guest host Terry Milewski.

'We want to stand up for Canadian jobs, we want to stand up for Canadian interests,' says deputy leader Lisa Raitt. 7:50

Raitt said because she is not privy to the behind-the-scenes talks, she could not assess the pros and cons of filing the WTO complaint at a critical juncture in NAFTA negotiations. But she said it could backfire if it was the wrong move.

"If they think it's a tool that's going to work, then they are using it. But if it's not a tool that's going to work, and it's going to blow up in their face, then of course we're going to have concerns about the tactics they used."

The solidarity between the Tories and the Liberals on the NAFTA file does, however, not extend to all trade files.

As Raitt was being interviewed her party sent out fundraising notice telling recipients Trudeau was "straining relations" with Canada's trade partners because of "his erratic behaviour."

"Trudeau has put the Trans Pacific Partnership trade deal at risk by even not showing up to the final meeting — catching our allies and trading partners off guard," the notice said, pointing out that free trade talks have yet to open with China.

"This is just the tip of the iceberg," the notice said, adding that 2018 "is going to be a critical year for Canada, with NAFTA negotiations not showing progress."