President Donald Trump assured Prime Minister Justin Trudeau that Canada isn’t the main target of his plans to reset U.S. trade relationships, as both leaders said they are committed to maintaining commercial ties and economic integration that support millions of jobs on both sides of the border.
At a joint news conference with Trudeau at the White House, Trump emphasized that, in dealing with the U.S.’s two North American Free Trade Agreement partners, he’s more bothered about trade imbalances with Mexico than with Canada.
“We have a very outstanding trade relationship with Canada,” Trump said, adding that they will be “tweaking it” in order to make it better for both countries. “It’s a much less severe situation than what’s taken place on the southern border.”
Trump’s comments mark a victory for Trudeau, whose government has sought for weeks to distance itself from Mexico on trade matters in a bid to protect a relationship with the U.S. that is worth $541 billion a year. The conciliatory remarks are also in line with investor expectations, which have shown little concern about a major trade upset between Canada and the U.S.
Canada’s currency, which was little changed today, has advanced 1.6% since Trump’s election on Nov. 8, the best-performing among its G-10 peers.
“The NAFTA comments, and favorable comparison of the trade relationship with Canada relative to Mexico, should give at least some comfort to Canadian economy watchers,” Canadian Imperial Bank of Commerce Chief Economist Avery Shenfeld wrote in a research note after the news conference.
Trade was at the top of the agenda for the first meeting between Trudeau and Trump as leaders of their respective countries. There’s a great deal at stake for the U.S. and its northern neighbor. Three quarters of Canadian exports head south across the border, and 18% of American exports cross in the other direction. Almost all of Canada’s oil goes to the U.S. and most of the country’s manufacturing is geared toward meeting U.S. demand.
At the joint news conference, Trudeau said keeping a healthy trading relationship with the U.S. is a real concern for Canadians, repeating continuously how the two countries are integrated economically, historically and culturally.
“We know our economy is very dependent on our bonds, our relationship with the United States,” Trudeau said. “We continue to understand that we have to allow this free flow of goods and services.”
Still, it’s unclear what may happen to Canada if Trump pushes ahead with a renegotiation of NAFTA. Any restrictions on what has been known as world’s longest undefended border would potentially drive up costs and crimp profits for some of Canada’s biggest companies, including Suncor Energy Inc. and auto-parts supplier Magna International Inc.
Trump has repeatedly said he wants significant changes to NAFTA, which he has called a "disaster." Trudeau’s cabinet believes that Canada isn’t his target, but they are concerned about suffering collateral damage from changes to the pact. Trudeau has expressed some willingness to discuss and possibly rework the deal, which has led to an expansion of trade between the three nations since it went into effect in 1994.
“Our relationship with Canada is outstanding, and we’re going to work together to make it even better,” Trump said. “And as far as the southern border is concerned, we’re going to get that worked," adding that the changes will be fair and ensure that "everybody is happy.”
By Jennifer Jacobs and Shannon Pettypiece