It is a threat that has loomed since Donald Trump took power, bursting into view each time the US president attacks Canada’s trade policies. But this week Canadians have been forced to confront the possibility of a breakdown in trade relations with their closest ally and biggest trading partner, after the US president announced a preliminary deal with Mexico.

The news left Canadians reeling and sent the country’s foreign minister rushing to Washington DC in the hope of salvaging the decades-old North American Free Trade Agreement (Nafta) – a three-way deal between the US, Canada and Mexico. The stakes for Canada are sky-high; the country sends three quarters of its exports south of the border while roughly 2.5m Canadian jobs depend on US trade.

There are no poison pills left — only bitter ones for Canada to swallow Meredith Lilly, former trade adviser

If Canada fails to keep its place in the free trade bloc, the US might respond with punitive tariffs on Canadian-made cars, mused Trump this week, breathing life into a scenario dubbed “Carmageddon” by Canada’s auto industry for the catastrophic job losses it could provoke.

“In essence, [prime minister Justin] Trudeau is being forced to negotiate with a gun to his head,” Meredith Lilly, a trade adviser to the former prime minister Stephen Harper, wrote in an article for the Canadian Broadcasting Corporation. “There are a range of matters still to be resolved, but it seems as though there are no poison pills left – only bitter ones for Canada to swallow.”

Trump is pushing for a draft of Nafta to be completed by Friday in order to accommodate a 90-day waiting period under US trade law and push the deal through before an upcoming change in Mexico’s government.

The US president’s actions have left trade experts across North America divided, sparking debates as to whether the deadline set out by the White House is firm and whether the president has the authority to transform the trilateral agreement into a bilateral one.

Others have pointed to the upcoming midterm elections in the US, contextualising Trump’s announcement as political theatre aimed at reassuring his base and upping the pressure on Canada to acquiesce to US demands.

Facebook Twitter Pinterest Donald Trump after a call to the Mexican president, Enrique Peña Nieto. ‘The Mexicans … did a very good job of stabbing Canada in the back,’ said economist David Rosenberg. Photograph: Shawn Thew/EPA

The result has been a tremendous amount of bewilderment over what, exactly, the Canadians can do this week as they sit down to negotiate the agreement. “If the mood prevailing in the Canadian camp in Washington could be summed up in a sentence, it would be: if you’re not confused, you’re misinformed,” noted the National Post columnist John Ivison.

The talks between Canada and the US are intensifying as the two countries push to hammer out a deal on a revamped Nafta by a Friday deadline, with both sides upbeat about the progress made so far.

Canada’s foreign minister has remained upbeat, describing Mexico’s concessions on auto rules of origin and labour rights as a breakthrough even as her team readied for talks to push through the night.

Among the thorniest issues is a US effort to scrap the Chapter 19 dispute resolution mechanism. Canadian officials have described this mechanism as a red line in negotiations, as it hinders the US from pursuing anti-dumping and anti-subsidy cases.

“I think the Canadian view on Chapter 19 is well known,” Chrystia Freeland, Canada’s foreign minister, told reporters on Wednesday. “This is a very intense moment in the negotiations. We’re trying to get a lot of things done really quickly. I think it will be most effective if we keep our negotiations on specific issues to the negotiating table.”

Nafta: what is it and why is Trump trying to renegotiate? Read more

Her office has shot down any talk of Canada being left out of the trilateral pact, seemingly siding with those who argue Trump does not have the authority from Congress for a bilateral deal. “Canada’s signature is required,” a spokesperson for Freeland said earlier this week.

Some pointed out that Ottawa has little other option but to appear optimistic. “Ottawa is putting on a brave face, to be sure, but what else can it really do,” asked David Rosenberg, the chief economist at Toronto’s Gluskin Sheff + Associates investment firm, in a morning note sent out on Wednesday.

After an electoral campaign in which Trump repeatedly took aim at Mexico by campaigning to build a wall, cracking down on immigration and bringing in a steep border tax, his actions as president suggest that Canada – one of the few major economies that buys more goods and services from the US than it sells – is now firmly in the administration’s crosshairs. “It is very clear after the way Canada was ordered to stay home and not partake in the agreement just inked, that the USA under this Trump administration is no friend at all,” Rosenberg said.

Rosenberg also took aim at Mexico, pointing to the country’s role in catapulting Canada into its current situation. “The Mexicans … did a very good job of stabbing Canada in the back as well as backtracking on issues that it had previously agreed with Canada were non-negotiable,” he said.

Weeks earlier, Mexican officials had reassured Canada – which had been sidelined from Nafta talks for more than two months – that they would not cut a separate deal with the US. “What happened to that?” Rosenberg asked. “Gracias for nothing.”