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Canada 'ready to take action' if US nixes tariff exemption

Canadian Prime Minister Justin Trudeau said he was "ready to take action" if Canada fails to secure a permanent exemption from the new steel and aluminum tariffs put in place by U.S. President Donald Trump.

Trudeau, at a press conference at a Rio Tinto aluminum facility in Quebec, offered no specifics about how Canada might react if the U.S. decided to reverse course on the temporary exemption.

The Prime Minister said several times that he had told Trump that tariffs on Canada would be painful for both U.S. and Canadian workers employed in sectors that are deeply integrated.

Trump recently decided to impose a 25% tariff on some steel imports and a 10% tariff on some aluminum imports after a national security review of the sectors, which, according to Brookings research, accounted for about 2%, or US$48 billion, of U.S. imports in 2017.

Canada is the top foreign source of U.S. aluminum and steel.

Trudeau's comments came as he kicked off a weeklong tour of aluminum and steel facilities in Canada amid a flare-up in trade relations between the U.S. and Canada and as other countries consider how they may respond to the tariffs.

Last week, the U.S. administration tied Canada's exemption, which it is offering to countries on a case-by-case basis, to the outcome of ongoing North American Free Trade Agreement negotiations. Trudeau said he considered the two issues separate.

Quebec Premier Philippe Couillard, who also spoke at the press conference, agreed. "We will not accept a bad NAFTA deal just to resolve this issue," he said.

Couillard also said Quebec is unwilling to make concessions on issues such as milk production. Much of the Canadian milk industry is shielded from imports, a sore point for the country's trading partners.

During the press conference, Trudeau singled out China, as the U.S. administration has done, for making too much steel and aluminum. He said Canada was happy to work with the U.S. to prevent the diversion of metal into Canada in "every way we can."