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Trump threatens auto tariffs on Canada as relationship with Trudeau continues to sour

President Trump talks with Canadian Prime Minister Justin Trudeau in June during the Group of Seven meetings in Charlevoix, Canada. (Evan Vucci/AP)

President Trump said Wednesday he was planning to impose severe economic penalties against Canada if it does not agree to major changes in its trade policies.

Speaking at a news conference in New York, Trump also said he was planning to effectively terminate the North American Free Trade Agreement and impose steep tariffs on all automotive imports from Canada to the United States.

“That’s the mother lode,” he said. “That’s the big one.”

Trump’s comments came as his relationship with Canadian Prime Minister Justin Trudeau appeared to hit a new low. The White House wanted Trudeau to agree to changes to NAFTA by this weekend, but talks stalled several days ago over a number of issues.

U.S. all but certain to miss deadline to include Canada in three-way NAFTA deal

Canada is the United States’s largest trading partner, but Trump has accused Canadians of ripping off American workers for years, largely because of complaints he has heard from dairy farmers in Wisconsin and New York.

As the relationship between Trump and Trudeau continues to worsen, it is unclear what that could mean for either economy, or for the trade relationship that connects thousands of companies in both countries.

Trump said Wednesday that Trudeau had sought a meeting with him during the U.N. General Assembly in New York, but Trump said he refused to participate, because he did not like how Canada was approaching the trade discussions.

A spokeswoman for Trudeau, however, said the Canadian prime minister never sought a meeting with Trump during the New York gathering. The spokeswoman declined further comment on Trump’s news conference.

Trump and several of his top aides have said Canadians were refusing to rework NAFTA because they want to continue protecting their local dairy industry through a controversial management program. But Canadian officials have said that multiple other issues remained unresolved, including Trump’s repeated threat to impose tariffs on auto imports.

Trudeau, speaking in New York on Monday, said he was open to redoing NAFTA but only if it made sense for Canadians.

“My focus on this throughout has been simply not escalating,” Trudeau said Monday. “Not opining. Not weighing in. My job is very simple. It’s to defend Canada’s interests, stand up for Canadians.”

Trump’s comments Wednesday made it clear he was not expecting any breakthrough in the coming days.

“We’re unhappy with the negotiations and the negotiating style from Canada,” he said.

The White House now plans to submit a new proposed trade agreement between the United States and Mexico for Congress to begin reviewing as soon as this week. The White House wants this trade deal to replace NAFTA, though it is unclear whether it is legally possible to replace a three-country pact with a two-country arrangement. A number of lawmakers from both parties have pleaded with the White House to try to ensure Canada remains in the talks.

During trade discussions, Trump often seeks to create leverage over other countries by threatening tariffs, and that is the approach he used Wednesday. He said he would impose tariffs on all of Canada’s automobile and auto-part imports if it does not agree to unrelated changes to NAFTA.

That could end up hurting U.S. auto companies that make cars in Canada and buy auto parts from Canada. Tariffs are paid by importers of products, not foreign countries, and U.S. business executives have said they will probably be forced to pass those costs on to consumers.

But Trump did not seem phased by that.

“If Canada doesn’t make a deal with us, we’re going to make a much better deal,” he said. “We are going to tax the cars that come in. We will put billions and billions of dollars into our treasury.”

He also repeated the promise that any new trade deal would no longer have the name NAFTA.

“I’m not going to use the name ‘NAFTA,’ ” he said. “I refuse to use it.”

Trump’s comments Wednesday were the latest in a string of attacks he has leveled against Trudeau and Canada this year. In June, Trump called Trudeau “indignant” and suggested he was not being fair to the United States.

That led Trudeau to suggest that Trump was trying to bully Canada during a June meeting of the Group of Seven leading economies.

“Canadians, we’re polite, we’re reasonable, but we also will not be pushed around,” Trudeau said at the time.

This angered Trump, who tried to retroactively withdraw from a joint statement that was issued at the conclusion of the summit.

David J. Lynch and Erica Werner contributed to this report.