Netizen 24 CAN: Canada considers retaliation 'sweet spot' as US moves to impose metal tariffs

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Canada considers retaliation 'sweet spot' as US moves to impose metal tariffs

LiveCanada considers retaliation 'sweet spot' as U.S. moves to impose metal tariffsCanada is looking for a "sweet spot" when it comes to retaliating against the U.S.'s decision to slap punishing tariffs on steel and aluminum imports, according to a senior government source.

Tariffs amounting to 25% on imported steel and 10% on aluminum announced by Commerce Secretary Wilbur Ross

News conference on U.S. tariffs on Canadian steel and aluminum 0:00

Canada is looking for a "sweet spot" when it comes to retaliating against the U.S.'s decision to slap punishing tariffs on steel and aluminum imports, according to a senior government source.

Secretary of Commerce Wilbur Ross announced Thursday the U.S. is following through with its threat to impose tariffs of 25 per cent on imported steel and 10 per cent on imported aluminum, citing na tional security interests.

U.S. President Donald Trump had granted exemptions to his North American Free Trade Agreement allies and the European Union, but those all were set to expire June 1.

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During a call with reporters Thursday morning, Ross said Canada's and Mexico's exemptions were linked to the progress of the NAFTA negotiations, which "are taking longer than we had hoped."

The senior source, who has direct knowledge of the talks, said the Canada-U.S. committee met Thursday morning to discuss an appropriate response, describing it as "finding a sweet spot."

They said the challenge is coming up with a response that makes sense and allows Canada to be a "credible country."

So far, no members of Canada's cabinet have offered a concrete plan of action. Foreign Affairs Minister Chrystia Freeland has previously said Canada will defend its industries and jobs.

Prime Minister Justin Trudeau is scheduled to address reporters on the new tariffs at about 1:30 p.m. ET.

Mexico, EU to retaliate

Mexico swiftly responded with tariffs of its own on pork bellies, grapes, apples and flat steel, The Associated Press reported.

The EU also announced it would trigger a dispute settlement case at the WTO and impose "rebalancing measures."

"Today is a bad day for world trade. We did everything to avoid this outcome," said EU Commissioner for Trade Cecilia Malmström.

"The U.S. has sought to use the threat of trade restrictions as leverage to obtain concessions from the EU. This is not the way we do business."

Ross tried t o deflect suggestions the tariffs would damage ongoing NAFTA talks and the upcoming G7 meetings in Quebec.

"If any of these parties does retaliate, that does not mean that there cannot be continuing negotiations," Ross said.

"They're not mutually exclusive behaviours."

He did allow some leeway, saying the U.S. could be flexible.

"We continue to be quite willing and indeed eager to have further discussions," Ross said.

Canada's procurement minister cast doubt on the U.S.'s national security justification.

A welder fabricates a steel structure at an iron works facility in Ottawa, Ontario, Monday, March 5, 2018. The U.S. will slap tariffs on Canadian, Mexican and European Union steel and aluminum as of midnight June 1. (Sean Kilpatrick/Canadian Press)

"It is very diffic ult to fathom that there would be a security risk imposed by Canada on the United States," said Public Services and Procurement Minister Carla Qualtrough while attending Cansec, Canada's largest annual arms show, in Ottawa.

She said the federal government has "contingency plans" in place to absorb the impact of potential U.S. tariffs on steel and aluminum on defence projects.

Multi-billion dollar programs to buy new fighter jets and warships are all heavily dependent on the price of steel.

"We prepare for this kind of thing," said the Delta MP. "There is money set aside, whether it be for tariffs or for interest rate fluctuations, so we can proceed with our defence procurement should there be additional costs associated because of tariffs or other unexpected circumstances."

'Not the action of a friend'

Finance Minister Bill Morneau announced late Wednesday that the government would bolster its measur es to prevent foreign steel and aluminum from being dumped into the North American market, but it appears to have done little to prevent the U.S.'s punitive duties

Trudeau called Ontario Premier Kathleen Wynne, Quebec Premier Philippe Couillard and Saskatchewan Premier Scott Moe, all in regions with large steel and aluminum sectors, on Wednesday to talk about the upcoming decision.

U.S. Commerce Secretary Wilbur Ross said Canada's and Mexico's steel exemptions were linked to the progress of the NAFTA negotiations, which 'are taking longer than we had hoped.' (Vincent Yu/Associated Press)

The Prime Minister's Office said they "all agreed to continue to defend the Canadian steel and aluminum industry from unwarranted tariffs and to stand up for the best interests of all Canadian workers and businesses."

Wynne, who is in the midst of an election campaign, called on her political rivals to come together to speak with one voice.

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"I will also ask the federal government to immediately provide support to the sector," she said in a statement.

"This short-sighted decision is an attack on Ontario's steel industry and its workers. It is not the action of a friend, an ally or economic partner."

Couillard called the tariffs "illogical."

"It's a bad decision for the Americans. They're increasing manufacturing and defence industry costs," he said in French.

Canada's attempt to thwart the tariffs came in concert with its European allies, who were also trying to stop the U.S.

Both Trudeau and French President Emmanuel Macron made their cases separately to the U.S administration, while other European officials met with their U.S. counterparts in Paris on Thursday.

With files from the CBC's Katie Simpson, Murray Brewster and The Associated Press

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