U.S. President Donald Trump's decision to order an investigation into auto imports is the United States' way of gaining leverage in the NAFTA talks, Canadian Prime Minister Justin Trudeau told Reuters May 23.
Trudeau said the potential tariffs would likely disappear if negotiations to update the North American Free Trade Agreement, currently stymied on auto issues, are successful.
Trump said the U.S. had launched a national security investigation into car and truck imports that could lead to new tariffs similar to those imposed on imported steel and aluminum.
"I am — even more than I was with steel and aluminum — trying to figure out where a possible national security connection is," Trudeau told Reuters. "Taking that a step further into autos seems to me to be on even flimsier logical grounds," he added. "But we know that this is very much linked to ongoing negotiations around moving forward on NAFTA."
Trudeau said the U.S. takes 75% of all Canadian goods exports and now Canada needs to diversify its trade flows away from the U.S.
The potential tariffs could destabilize Canada's auto industry, which is home to major plants operated by General Motors Co., Ford Motor Co., Fiat Chrysler Automobiles NV, Honda Motor Co. Ltd. and Toyota Motor Corp. said the Reuters report.
