Canada hoping its own tariff threat will prompt U.S. climbdown: Morneau

WHISTLER, B.C. – Finance Minister Bill Morneau says he's hopeful the threat of retaliation against U.S. trade measures will convince the Trump administration to back down from the steel and aluminum tariffs it has imposed on its G7 allies.

The tariffs have landed just as Morneau presides over a G7 finance ministers' meeting in Whistler, B.C., where the event's pre-set agenda has been overtaken by talk of protectionism and fears of the opening salvos in a protracted trade war.

Morneau said Friday that the federal government isn't quite ready to discuss support or potential bailout packages for those Canadian sectors caught in the crossfire.

Instead, he argued, the focus now is to use the threat of retaliatory measures as a way to make the U.S. reconsider its own tariffs before any negative economic impacts actually materialize.

Canada isn't alone in its fight: the U.S. measures also struck other G7 allies — and those partners have returned fire with potential tariffs of their own.

Ottawa's response was a package of retaliatory tariffs that doesn't go into effect until July, leaving plenty of time for U.S. President Donald Trump to reconsider his position.

"We've specifically put forth … countermeasures that demonstrate our view that this is unproductive, and we see that response as being a way to get us back to the table so the impacts actually don't happen," Morneau said Friday.

"Of course, we seek not to have these impacts happen by getting the United States to agree that these tariffs should be taken off."

Morneau has called the steel and aluminum tariffs "absurd" because Canada is by no means a security risk to the U.S. He warned the measures will destroy jobs on both sides of the border.

He said he used a private, bilateral meeting Thursday in Whistler to personally deliver that message to U.S. Treasury Secretary Steven Mnuchin.

The finance minister declined to share details about how Canada's argument was received by Mnuchin, but he predicted that some sparks would fly during Friday's G7 talks.

"Clearly, that is going to be a difficult discussion."

The combined response by G7 partners — including the European Union — of imposing counter-tariffs could take away any argument that Canada is too small to intimidate the U.S. on its own, said one senior Canadian government official.

The official, who spoke on condition of anonymity due to the sensitivity of the situation, said Trump may have made a tactical error in targeting so many countries at the same time.

Ottawa, meanwhile, has been exploring financial assistance options for the steel and aluminum industry and its workers, similar what was done for the softwood lumber industry, the insider said.

Last year, the federal government offered $867 million in financial support to help lumber producers and employees weather the impact of punishing U.S. tariffs on Canadian softwood exports.

The source said the federal government's list of retaliatory tariffs is made up of items that could be easily replaced by domestic suppliers or other countries — and is also designed to target U.S. states that will make the most noise in Congress.

During his news conference Friday, Morneau said: "Right now, we're talking about how we can actually move forward with an approach that's going to move back these tariffs for the benefit of Americans and the benefit for Canadians."

Earlier this week, the U.S. tariffs immediately surged to the top of the G7 agenda in Whistler — and the issue is now positioned as the main priority for next week's leaders' summit in the Quebec region of Charlevoix.

The American move is being viewed as a direct attack on G7 unity and threatens to fracture the long-standing multilateral club of wealthy nations into something observers describe as a "G6 plus one," with the U.S. as the outlier.

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