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Despite the seriousness of the matter, Prime Minister Justin Trudeau and U.S. President Donald Trump were all smiles ahead of their bilateral meeting at the G7 summit.

The two spoke with media on Friday ahead of a private meeting – and the topic of tariffs inevitably came up.

“I appreciate, you know, Justin has agreed to cut all tariffs, all trade barriers between Canada and the United States, so I’m very happy,” Trump said with a smile.

Trudeau responded with a laugh: “So I’d say NAFTA is in good shape.”

Trump was referring to the retaliatory tariffs Canada slapped on the U.S. on a number of items totaling about $16.6 billion worth.

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WATCH: Trump takes shots at Canada ahead of G7 summit

1:57 Trump takes shots at Canada ahead of G7 summit Trump takes shots at Canada ahead of G7 summit

The move was in response to the U.S. tariffs, which include a 25 per cent tax on steel and a 10 per cent tax on aluminum imports from Canada and many other allied countries.

To be clear, the tariffs are still on.

“We are actually working on it,” Trump clarified. “But our relationship is very good. We are actually working on cutting tariffs and making it all very fair for both countries. And we’ve made a lot of progress today.” Tweet This

As the two left, a reporter asked if Trudeau was disappointed that Trump was leaving early (Trump will be leaving the G7 early to prepare for his upcoming summit with North Korea’s Kim Jong Un) but before Trudeau could respond, Trump jumped in.

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“No, he’s happy,” he said.

The comments come one day after Trump called Trudeau “indignant” on Twitter Thursday night, and referenced a tariff of up to “300% on dairy” saying he was hurting U.S. farmers.

For his part, Trudeau has expressed his displeasure over the tariffs (which were invoked citing national security) saying that Canada and the U.S. have had a great relationship over the years. He also called the tariffs “insulting and unacceptable.”

The topic of trade has held a shadow over the G7 meeting, which started Friday in Charlevoix, Que.

In Trump’s first public remarks on Canadian soil, he once again reiterated his desire for separate trade deals with Canada and Mexico, instead of the North American Free Trade Agreement.

Foreign Affairs Minister Chrystia Freeland held firm against what she called “illegal and absolutely unjustified” tariffs even though the leaders were playing nice.

“Canada will not change its mind when it comes to illegal and absolutely unjustified application of tariffs,” she said on Friday.

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WATCH: Freeland: Canada rejects ‘illegal, unjustified’ U.S. trade tariffs

1:21 Freeland: Canada rejects ‘illegal, unjustified’ U.S. trade tariffs Freeland: Canada rejects ‘illegal, unjustified’ U.S. trade tariffs

Trump has also met with President Emmanuel Macron of France to discuss the tariffs.