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President Donald Trump, left, and Canadian Prime Minister Justin Trudeau attend a news conference in Buenos Aires, Argentina, on Nov. 30, 2018. Bloomberg photo by Sarah Pabst

Despite trade deal signing, ties with Canada turning cold due to tariffs

The Friday, Nov. 30, signing of the new North American trade deal featured ceremony but not much celebration - at least from the Canadians.

Canada, the United States and Mexico were locked in tense talks for more than a year. In that time, President Donald Trump slapped tariffs foreign on steel and aluminum, threatened to ruin Canada with auto tariffs and tweeted insults at Canadian Prime Minister Justin Trudeau.

At the signing on the sidelines of the Group of 20 summit in Argentina, Trump hailed the agreement as a "truly groundbreaking achievement," that will be "the envy of nations all around the world."

For Canada, which is heavily dependent on the U.S. economy, having an agreement, any agreement, was mostly just a relief. "The new agreement lifts the risk of serious economic uncertainty that lingers through a trade negotiation process," said Trudeau.

As the agreement heads to Congress, with no end to steel and aluminum tariffs, typically cozy Canada-U.S. ties have turned cold.

Trudeau used the signing ceremony to call on Trump to lift the tariffs. "Donald, it is all the more reason we need to keep working to remove the steel and aluminum tariffs between our countries," he said, adopting Trump's practice of referring to leaders by their first name.

"Our position is please just get rid of the tariffs," said David MacNaughton, the Canadian ambassador to Washington. "We do need to resolve steel and aluminum. It's not going to affect moving ahead with the deal, but it affects the tone of the relationship."

James Blanchard, a former U.S. ambassador to Canada, said that the working-level relationships between Canada and the United States are still solid, but high-level ties are at new low.

"The day-to-day relationships between cabinet members, governors, minus a few hiccups, are good," he said. "But the tone in the White House has never been worse."

On the campaign trail, Trump often railed against the North American Free Trade Agreement, or NAFTA, calling it "the worst deal ever."

The negotiations started relatively smoothly, but in March, Trump made good on a threat to level tariffs on foreign steel and aluminum on the grounds of national security.

The administration's goal was to target Chinese overcapacity, so Canada and Mexico were initially granted exemptions. Then, in May, the White House announced it was ending the exemption: U.S. allies would face the same levies as Beijing.

The move was interpreted as a negotiating tactic, but Canada was offended by the suggestion that it was a security threat.

"Our soldiers who had fought and died together on the beaches of World War II and the mountains of Afghanistan, and have stood shoulder to shoulder in some of the most difficult places in the world, that are always there for each other, somehow - this is insulting to them," Trudeau said then.

At a Group of 7 summit in June, Trump got angry about a comment from Trudeau, refused to sign the communique and started tweeting insults at the Canadian leader from his plane.

By August, with no trade deal in sight, he threatened auto tariffs that would bring the "ruination" of the Canadian economy.

"You hear, 'walk quietly and carry a big stick.' In this case they carried the big stick and were not quiet about it," said Bruce Heyman, a former U.S. ambassador to Canada.

In late September, when the three sides reached a tentative deal, many believed the steel and aluminum tariffs would be lifted. But they remain.

Business groups and politicians on both sides of the border are now calling for exemptions for allies like Canada.

"My overall view is the you can pick a fight with China or you can pick a fight with the free world, but you can't do both simultaneously," said Rep. Mike Gallagher, R-Wis.

In the run-up to the signing, Canada made clear it was not up for a champagne celebration.

MacNaughton, the Canadian ambassador to Washington, joked in an interview with Politico earlier this month that Canada would send "the fourth secretary of [Canada's] Buenos Aires Embassy with a bag over his head" to sign the deal.

In the end, they sent Trudeau.

With the signing done, it will move from the negotiating teams to lawmakers in the three countries.

For now, Canada will be focused on building U.S. support for an end to steel and aluminum tariffs and lobbying Congress to adopt the agreement between the United States, Mexico and Canada.

Laura Dawson, director of the Canada Institute at the Wilson Center, said she did not see why the agreement would not make it through Congress, particularly given Canada-backed chapters on labor, the environment and gender.

"Canada made it a more Democrat-friendly deal," she said.

In the long run, the rift between Ottawa and Washington may push Canada away from its biggest trading partner and toward new alliances, said Eric Miller, a trade specialist who runs Rideau Potomac Strategy Group, a D.C. based consultancy.

"The trust that Canada had placed in the relationship was abused," Miller said, "and Canada has to find ways to no longer be as reliant on the U.S."

This article was written by Emily Rauhala, a reporter for The Washington Post.

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