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An agreement between the United States and Mexico to renovate key portions of NAFTA is being cast as a near-final deal, with U.S. President Donald Trump signalling his negotiators will take a hard line with Ottawa as talks move to the next stage.

“The Americans are clearly trying to spin this as a deal they’ve reached with Mexico, and Canada can take it or leave it,” said Avery Shenfeld, chief economist with CIBC Capital Markets. “Trump was trying to emphasize that he’s prepared to leave Canada out, even though the Mexicans are making it clear that they would prefer a trilateral deal.

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“This could just be the initial tough negotiating posture, but it does signal that the Americans are intending to take a tough line with Canada.”

Trump’s announcement of the agreement with Mexico — a move that clears the way for Washington to turn its focus to Ottawa and contentious bilateral issues such as dairy supply management — was accompanied by a threat to slap Canada with a 25 per cent tariff on auto imports if the two countries don’t reach a deal to revamp the 24-year-old trade pact.