Canada’s options limited as it faces prospect of U.S. trade war

By David Ljunggren and Rod Nickel

OTTAWA/WINNIPEG (Reuters) – From cherries to wine and oil, Canada has a range of tools to retaliate against any Trump administration trade attacks but they are either too limited or too painful to invoke.

Ottawa is keen to avoid a costly trade war with the United States as NAFTA renegotiations loom, given the U.S. economy is ten times larger than Canada’s.

Cutting off energy exports is an option so fraught with risks – Canada is the largest supplier of energy to the United States – that Ottawa has never discussed it seriously. Meanwhile, hitting back on U.S. imports of goods like cherries and office chairs may have too little impact, leaving Canada with limited leverage.

U.S. President Donald Trump’s administration has suddenly ramped up its attacks on Canada, imposing tariffs on softwood lumber and vowing to take action against what it calls unfair practices by Canadian dairy farmers.

Trump last week also said Canadian energy was another example of a bad trade deal for the United States, but gave no specifics or evidence.

Canadian officials played down the tariffs as disappointing, just one part of an otherwise successful trade relationship, even though Canadian government ministers have fanned across the United States selling the virtues of bilateral trade.

“There are no victors in a trade war,” Scott Brison, a senior Canadian cabinet member, said by phone from Detroit.

A senior Canadian political source said Ottawa would not for now be changing its approach despite Trump’s harsher tone.

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