In order to persuade Donald Trump to eventually drop his punishing steel and aluminum tariffs and finally agree to a renegotiated NAFTA, Canada's strategy is to somehow engineer a way for the US president to claim a political victory by doing just that.
Officials noted this is the strongest trade action Canada has taken in the post-war era. The Dow Jones Industrial Average lost 1 percent and the S&P 500 shed 0.69 percent.
Speaking to reporters outside the White House, Trump cast his decision to impose tariffs on steel and aluminum exported to the US from the E.U., Canada and Mexico as a way to level an uneven playing field.
"We want open markets, free markets but we have to convince the USA administration", Economy Minister Peter Altmaier said.
The federal government said Thursday that it would impose dollar-for-dollar counter-tariffs on $16.6 billion worth of United States goods in response to exemptions for Canada, Mexico and Europe from import duties of 25 per cent on steel and 10 per cent on aluminum.
"The American administration has made a decision today that we deplore, and obviously is going to lead to retaliatory measures, as it must", said Canadian President Justin Trudeau.
The EU, Canada, and Mexico took umbrage with the US's justification for the tariffs.
The products would be hit if the WTO rules that the U.S. steel and aluminum tariffs are illegal.
Shares in StelCo Holdings Inc fell 3.5 percent, while the broader Canadian stock index ended up 0.1 percent.More news: Over 50 Afghan Taliban leaders killed in rocket strike: U.S
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The Mexican peso dropped about 1 percent, hitting its weakest level against the dollar in almost 15 months, and the Canadian dollar shed about 0.6 percent.
The EU has threatened tariffs on Harley-Davidson motorcycles and bourbon, measures aimed at the political bases of US Republican legislators.
Macroeconomic Advisers, a research firm focused on the United States economy, reported Wednesday that the USA trade deficit in goods was "much narrower than expected", implying "substantially more" U.S. exports in the second quarter. Opponents of the tariffs on European and North American metals say the administration is hurting allies when it needs them most to put pressure on Beijing.
Mr. Altmeier, who declined a request for an interview, was especially anxious by the Trump administration's threats to impose tariffs on auto imports, the people said.
The International Monetary Fund (IMF) has joined criticism of President Donald Trump's plan to impose tariffs on metal imports from key United States allies, which came into force on Thursday, saying there would be no winners from a "protracted trade war" as countries spun out retaliatory taxes on exports to the USA and Brussels filed legal challenges against the U.S. and China. It has demanded permanent exemption from any new tariffs.
Britain exports around £360m in steel to the U.S. every year, 10% of the industry's total exports. "Do timber and lumber in US?"
"The U.S.is now exercising its power", said Ms. Haugland, the DNB Markets economist.
"FAIR TRADE!" read one tweet by Trump Thursday.
Prasad warned that the United States was doing so at the cost of alienating key allies and undercutting broad worldwide pressure on China to change its trade and economic practices.
But Luis Colunga, general secretary of the Industiall union which represents European steel workers, said: "The issues facing American workers are the same ones facing European workers: global overcapacity and unfair state aid".