Canadian trade minister says reaching deal with U.S. in best interest for both countries

Geoff Bennett:

And we turn now to Canada’s trade representative, Dominic LeBlanc, a central figure in Canada’s negotiations with the U.S.

Welcome to the “News Hour.”

Dominic LeBlanc, Canadian-U.S. Trade Minister:

Good evening. Thanks for having me.

Geoff Bennett:

Just days ago, you said the U.S. and Canada were very close to a trade agreement. Now the talks have fallen apart. The two countries are moving toward a trade war. You were at the negotiating table. What happened?

Dominic LeBlanc:

So, you’re right. Last week, middle of the week, Wednesday, Thursday, we thought that we were close to an agreement. We — President Trump had announced that there was a deal. We said that we were optimistic, we were positive, we were very close, as you said.

That was our view. And then, as we got into the final hours on Friday, President Trump had set a deadline of midnight Friday for a series of Section 338 tariffs at 50 percent to apply to almost $28 billion of Canadian exports to the United States. That was the — sort of the rush, the intensity to try and get the agreement.

In the end, on that Friday evening, there were sort of three or four significant issues. What was included in the auto tariff reductions? How do we treat steel and aluminum derivative products? Big economic issues for us. And we weren’t able to get to a landing spot that Prime Minister Carney thought was in Canada’s economic interest.

So, at that point, we weren’t able to conclude the deal.

Geoff Bennett:

The U.S. trade representative, Jamieson Greer, said that the U.S. offered to do the following, reduce a 25 percent tariff on cars that President Trump implemented last year, which you mentioned, reduce the tariff on steel from 50 percent to 25 percent for the majority of steel that Canada sends to the U.S., and reduce all aluminum tariffs from 50 percent to 25 percent.

What about that was insufficient, in your view?

Dominic LeBlanc:

That’s a fundamental question.

First of all, we started the conversation from a premise that the USMCA agreement that President Trump had signed in his first term had zero tariffs in those sectors. So the U.S. government unilaterally decided in the 232 tariffs to impose on key sectors of our economy, steel, aluminum automobiles, our case, softwood lumber as well.

These same sort of economic engines that President Trump is promoting in the United States are critical to our economy. And the challenge for us is, those are the sectors over the last number of decades where we have become the most integrated with the United States. Automobiles is the best example.

So, 50 percent of the cars made in Canada are made with United — with American parts. We’re the biggest customer. We buy more American vehicles than a whole bunch of other countries combined. We have an integrated economy. At one point, President Trump decided to apply these tariffs.

So, if there was a different tariff treatment for something as important to Canada as auto parts or medium- and heavy-duty trucks, then you can see that Prime Minister Carney just concluded that the economics of that didn’t work for the Canadian industry. That’s just one example, but it’s an instructive one.

Geoff Bennett:

Well, given the enormous amount of integration between the U.S. and Canadian economies, is it even possible for both countries to engage in a trade war without inflicting major damage on both countries’ economies?

Dominic LeBlanc:

Well, and that has been exactly our concern. So we certainly didn’t seek this particular trade conflict. We were hopeful that we could find an agreement that would be in the economic interest of both countries, respecting Canadian sovereignty, respecting critical parts of our economy, just as President Trump wants to build and protect those parts of the American economy.

We still believe that there’s an agreement possible that is in the best interest of both countries, that — for example, in steel, we have been working with the United States on stopping non-market economies from dumping steel into the North American economy.

We — Canada was the first country to put in melt and pour rules around where was the steel melted and poured to qualify as Canadian steel in our case. So there are many common objectives.

Geoff Bennett:

You say a deal is still possible, even as Canada is preparing to retaliate dollar for dollar. What sectors will Canada target?

Dominic LeBlanc:

So we’re obviously looking to protect the same sectors that — of our economy that are facing this latest round of 338 — Section 338 tariffs at 50 percent. So there’s steel products. There’s paper products. There are aluminum derivative products.

I mean, these are key parts of our economy that have exported to the United States and we have imported from the United States in a tariff-free context for decades. So we’re going to make sure that there’s not an unfair advantage for American exporters sending goods to Canada.

Geoff Bennett:

The prime minister said over the weekend that the U.S. is using economic integration as a weapon, that was the phrase that he used, and that America’s signature is now, as he said, written in pencil.

That sounds like something much bigger than a dispute over tariff rates. Are we witnessing right now a permanent rupture in the U.S.-Canada relationship?

Dominic LeBlanc:

No, I wouldn’t be that stark.

The U.S.-Canada relationship is so broad-based. There’s a critical economic partnership that’s existed for decades. There’s a security and defense relationship that has also seen us stand shoulder to shoulder with the United States in global conflicts for decades.

It’s also a very personal relationship. I think, for Americans to understand that, my perspective, there — almost every Canadian has some personal connection to the United States. In my case, I went to university there. I have five first cousins that live in Massachusetts.

Many Canadians own property in the United States, go on holidays in the United States, have business relationships. So, there’s a deep personal connection. I represent a district on the east coast of Canada, just sort of in a province that borders the state of Maine. These small border towns in Canada and in Maine, in New Brunswick on our side and in Maine, share fire departments in the case of a major fire.

The fire trucks literally cross the border in these small towns to help each other out. So this is a deep, deep relationship built on years and years of common interest and goodwill. So I’m not pessimistic. We’re into some economic turbulence and headwind. But we will navigate. We will take our responsibilities as a government of Canada to do what we have to do.

But I remain convinced that it’s an enduring relationship that is that is very, very broad-based.

Geoff Bennett:

An enduring relationship.

Dominic LeBlanc, Canada’s minister in charge of U.S. trade, thank you for joining us this evening, sir.

Dominic LeBlanc:

Thanks for having me on your program. Have a great evening.

Geoff Bennett:

And a note, the “News Hour” has requested an interview with the U.S. trade representative, and we hope to bring you that interview soon.