Canada is vowing to retaliate against the U.S. if President Trump subjects NAFTA partners to the same tariffs as other trade nations and eliminates the NAFTA loophole. {Go Deep}

The NAFTA Loophole allows Canada and Mexico to broker independent trade deals with Asian and European companies; then use their Mexican and Canadian access to the U.S. market as a backdoor around U.S. Tariffs.

This loophole has been exceptionally rewarding for both Canada and Mexico and for more than a decade they have structured their economies around loophole retention. U.S. corporations, seeing advantages from cheap Asian parts in Mexico and Canada, have moved some manufacturing there to take advantage. In an effort to reset the trade imbalance created by the loophole President Trump is threatening to close it.

OTTAWA (Reuters) – Canada will “respond appropriately” to any U.S. steel and aluminum tariffs, Foreign Minister Chrystia Freeland said on Wednesday, less than two days before the punitive measures are due to kick in. “The government is absolutely prepared to – and will defend – Canadian industries and Canadian jobs. We will respond appropriately,” Freeland told reporters when asked about possible U.S. action.

Canadian government officials have said they are prepared to impose retaliatory tariffs should the Trump administration make a move but have not revealed what they have in mind. Trump says the steel and aluminum tariffs would be imposed for security reasons, which Freeland said was “frankly absurd”. Canada has repeatedly rejected any suggestion it could be a threat to the United States. Freeland spoke after returning from Washington, where she met U.S. Trade Representative Robert Lighthizer to discuss NAFTA. The negotiation “will take as long as it takes to get a good deal”, she said. (read more)

Foreign Minister Freeland will not allow Canada’s economic needs to be ignored: