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Freeland talks tough on trade with Trump team

Secretary of State Rex Tillerson meets with Canadian Foreign Affairs Minister Chrystia Freeland, Wednesday, Feb. 8, 2017, at the State Department in Washington.

Andrew Harnik/Associated Press

Foreign Affairs Minister Chrystia Freeland has warned the Trump administration that Ottawa is ready to retaliate if the new President imposes tariffs at the border, potentially sparking a trade war between Canada and its largest trading partner.

Ms. Freeland, who met with Donald Trump's Secretary of State, Rex Tillerson, in Washington Wednesday, said she delivered a message that Ottawa has no appetite for tariff walls and is not afraid to fight back.

"I did make clear that we would be strongly opposed to any imposition of new tariffs between Canada and the United States, that we felt tariffs on exports would be mutually harmful to both Canada and the United States and that, if such an idea were ever to come into being, Canada would respond appropriately," Ms. Freeland told reporters after her sit-down with Mr. Tillerson.

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Despite Ms. Freeland's tough talk, a senior Canadian official said "no one wants to start a trade war."

A Canadian government source said Ms. Freeland had several other concerns to bring to U.S. officials, including a border adjustment tax proposed by members of Congress, Mr. Trump's executive order favouring U.S.-made steel and his push for biometric screening at the border.

A border adjustment tax, championed by U.S. House Speaker Paul Ryan as an alternative to new tariff walls, would impose a higher tax burden on U.S. companies that import goods from other countries compared with firms that buy all of their products from within the United States.

Such a move would punish companies that import from Canada.

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Ms. Freeland also told Mr. Tillerson that Canada would stand by Ukraine, particularly amid the upsurge in fighting in the eastern Donbass. U.S. allies have been alarmed at Mr. Trump's signals that he wants a warmer relationship with Russian President Vladimir Putin and that the United States would roll back sanctions imposed on Russia after the annexation of Crimea.

"I expressed as I always do Canada's very strong support for Ukraine and our strong view the invasion and annexation of Crimea is illegal and a threat to the international order," Ms. Freeland said.

Mr. Trump's edict that new oil and gas pipelines be built using U.S.-made steel, meanwhile, could affect 400 jobs at Evraz, the Regina steel plant that supplies much of the pipeline on both sides of the border, including Enbridge's Line 3 replacement project between Edmonton and Wisconsin and a quarter of the material for the proposed Keystone XL line.

Another worrying development for Ottawa is a reference in Mr. Trump's immigration executive order to collecting biometric data – such as fingerprints – on all travellers entering or exiting the country. Such a process, one Canadian official warned, could have serious economic implications by causing bottlenecks at the border.

The opposition parties in Ottawa threw their support behind Ms. Freeland's threat to hit back at the Trump administration. "I am a firm believer in equal push back. You have to let them know we are serious as well," Conservative trade critic Gerry Ritz said in an interview.

But NDP Leader Tom Mulcair said the Trudeau government has not been clear about its intentions in responding to Mr. Trump's protectionist policies. "What is the Canadian government's position, and we don't have a single line of text from them."

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Prime Minister Justin Trudeau's office is still trying to sort out a date to meet with Mr. Trump at the White House. Mr. Trump's adviser Kellyanne Conway told CNN on Tuesday that the meeting would take place next week, but a Canadian official said it has been hard to find time in both leaders' schedules.

Despite carrying a big stick, Ms. Freeland said she spent most of her meetings emphasizing that Canada's relationship with the United States is "mutually beneficial" – a key message for reassuring Mr. Trump he is not getting cheated by his neighbours to the north and can leave the trading relationship relatively unchanged.

In a speech on the eve of her meeting with Mr. Tillerson, Ms. Freeland offered insight into how she has translated this approach into negotiating table tactics in the past.

Speaking at a reception at the Canadian embassy in Washington for women newly elected to the U.S. Congress, Ms. Freeland recounted her showdown with the Belgian region of Wallonia last October over Canada's free-trade deal with the European Union. To force a resolution with Wallonia, which was holding up the entire agreement by refusing to sign off on it, Ms. Freeland decided to walk out of the negotiations. She calculated it would be most effective to lay a guilt trip on her intransigent negotiating partners.

"We decided it was really important not to be angry walking out, because we wanted to make the Walloons feel guilty," she recalled. "You know: 'We're Canadians, we're so great, we're so nice' … so it was a more 'in sorrow' than 'in anger' tone I was aiming for."

The gambit worked like a charm. Immediately, Ms. Freeland said, European officials were begging her to come back to the table. Within days, she had a deal.

"Walking out was important because it created a crisis and made it their problem," she said. "I had all the Europeans calling me up for the next 24 hours going, 'Please don't go home, please, we're so sorry, you're so right, we're going to make it work.' And in the end, they did."

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About the Authors
Washington correspondent

Adrian Morrow covers U.S. politics from Washington, D.C. Previously he was The Globe's Ontario politics reporter. He's covered news, crime and sports for The Globe since 2010. He won the National Newspaper Award for politics reporting in 2016. More

Ottawa Bureau Chief

Robert Fife is The Globe and Mail's Ottawa Bureau Chief and the host of CTV's "Question Period with The Globe and Mail's Robert Fife." He uncovered the Senate expense scandal, setting the course for an RCMP investigation, audits and reform of Senate expense rules. In 2012, he exposed the E. More

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