Canada threatens to cancel arms deal with US in tariff dispute

Canadian Prime Minister Justin Trudeau has warned that Ottawa may cancel a major arms deal with the United States following Washington’s imposition of heavy duties on Canadian aircraft exports to the US.

Canada was set to buy 18 new Super Hornet warplanes from the American Boeing Company until the multinational aerospace corporation successfully petitioned US President Donald Trump’s administration to slap hefty tariffs on Canadian Bombardier’s aircraft imports into the US.

Washington argued that the imposition of anti-dumping penalties on the Canadian aerospace company, which is Boeing’s rival, came after the White House found Bombardier guilty of committing trade abuses by receiving state subsidies. The Trump’s administration seeks to slap a 220-percent countervailing duty on Bombardier’s CS100 and CS300 jet airliners sold in the US market.

“I highlighted to the president [Trump] how we disagreed, vehemently, with Commerce’s decision to bring in countervailing and anti-dumping duties against Bombardier,” Trudeau told reporters after concluding talks with the US president on Wednesday.

The Canadian premier further said that attempts made by Boeing against the Bombardier meant that tens of thousands of aerospace workers across Canada would lose their jobs and that Ottawa would not look on those attempts positively. “I certainly mentioned that this was a block to us purchasing any — making any military procurement from Boeing.”

The development comes as there is growing animosity over how to reshape the North American Free Trade Agreement (NAFT). President Trump is set to revamp the 23-year-old pact, which also includes Mexico. He has already cut US trade deficits but has not planned exactly what changes he would like to make.

“If we can’t make a deal, it’ll be terminated and that will be fine. It has to be fair to both countries,” Trump said after discussing the future of NAFTA with Trudeau in the Oval Office on Wednesday, expecting a “tough negotiation” over the pact.

The US president muses about inking a bilateral trade deal with Canada and leaving Mexico behind, a move which practically alters the structure of the tripartite treaty.

“It’s possible we won’t be able to reach a deal with one or the other. But in the meantime, we’ll be able to make a deal with one. But I think we have a chance to do something very creative that’s good for Canada, Mexico, and the United States,” Trump said.

At the same time as the American president and the Canadian premier met in the White House, US Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo Villarreal, and Canadian Foreign Minister Chrystia Freeland commenced their negotiations over NAFTA at an expert level in the Washington suburb of Arlington, Virginia.

Lighthizer announced that the talks, complicated by the aerospace spat, had been extended by 48 hours and would conclude on next Tuesday, saying “Thus far, we have made good progress, and I look forward to several days of hard work.”