Ottawa makes plans to retaliate if U.S. follows through on auto tariff threat
One senior government official says Trump is 'playing with fire'
Senior government officials are quietly drawing up a list of ways for Canada to retaliate against the United States if it's hit with even more tariffs by its closest ally.
Sources tell CBC News that Ottawa is preparing for a "worst case scenario": the Trump administration making good on its threat to impose 25 per cent tariffs on imported vehicles and auto parts.
The sources say Canadian officials will exhaust every possible option to avoid new tariffs but — given the escalating tensions with Washington — Canada must be prepared for anything and everything.
Analysts are looking at a range of options, which sources say could include placing even more retaliatory tariffs on American products.
The analysts also are looking at the impact auto tariffs would have on the Canadian dollar and on overall competitiveness in the North American auto sector.
"He's playing with fire," said one senior government official of U.S. President Donald Trump's threat to impose new tariffs on the auto industry.
"It is against their own national interest to do it, but that was the case with steel and aluminum, so we have to be responsible and prepare our own response."
Canada-U.S. relations suffered a significant blow over the weekend when Trump and his top aides launched a scathing personal attack against Prime Minister Justin Trudeau over his opposition to U.S. tariffs on steel and aluminum.
Following Trudeau's closing news conference at the G7, Trump used Twitter to call the prime minister "very weak and dishonest." Trump then announced he was pulling U.S. support for the joint G7 communique that had been agreed to just hours earlier.
The outbursts continued Sunday when one of Trump's most trusted advisers, Peter Navarro, went on Fox News to declare "there is a special place in hell" for Trudeau.
'You don't get in a fight with a skunk'
A second senior source with direct knowledge of the situation said Canadian officials were "puzzled" by the personal nature of the attacks, and particularly the harsh words from Navarro.
"But what are you going to do?" the source added. "You don't get into a fight with a skunk."
Despite the outward displays of hostility, the source said lines of communication are open between the Trudeau government and the Trump administration, and high-level conversations are still happening.
In the meantime, Canada will continue to lobby the Trump administration for an exemption from the steel and aluminum tariffs.
The added challenge now, said the source, is to ensure a "professional" tone returns to those discussions.
The angry rhetoric seemed to catch some senior Canadian officials off guard, since they reportedly felt Friday's bilateral meeting with Trump at the G7 was positive.
"This bilateral was among the most productive we've ever had and we have had some productive ones," the first source said.
Along with steel and aluminum tariffs, and the possibility of new tariffs on the auto sector, Trudeau and Trump discussed the ongoing NAFTA negotiations.
Those trade talks have stalled over Canada and Mexico's opposition to a so-called sunset clause. The Americans have demanded that a re-negotiated NAFTA include a provision that would kill the deal every five years, unless all three countries agreed to remain in the trade pact.
Trump 'waved away' sunset clause: source
Canada and Mexico have rejected the idea; both countries argue it would lead to too much instability.
The source said Friday's conversation was going so well that "Trump waved away the importance of a sunset clause, and I can tell you it took his chief negotiator by surprise."
Members of Trump's inner circle gave Canadian officials a heads-up the president might hold a news conference on Saturday before departing for his meeting with North Korean leader Kim Jong-Un.
The news conference took place as planned and Canadian officials believed all was well as Trump and his team departed for Singapore.
When Trump's angry tweets first surfaced, Trudeau's staff thought it might have been a joke. Officials checked to make sure the tweets came from the president's own account.
Once the tweets were verified, senior Canadian officials made a series of phone calls in search of advice and support.
Former prime minister Brian Mulroney, who has been advising the Trudeau government on how to deal with Trump, was consulted. And Ottawa looked to the new premier-designate in Ontario, Doug Ford, to offer his support — which he did without hesitation.