As NAFTA negotiations linger on, let’s step back and see what Trump’s threats are all about.

The US has had a goods surplus with Canada every month since 1985.

Nonetheless, Trump is incredibly annoyed at Canada and threatens to put tariffs on Canadian cars.

Well, Trump better make that US cars because Canada does not have any Canadian car brands.

The US would lose far more from Canadian tariffs on cars than vice-versa. But both sides would lose in such a war.

Tariffs are a tax on consumers. No one wins from them.

For now, Canada says it will Stick to its Guns at NAFTA Talks Despite Trump Pressure.

Canadian Prime Minister Justin Trudeau indicated on Tuesday that Canada would not compromise on key demands at high-level talks this week with the United States to update the North American Free Trade Agreement.

“No NAFTA is better than a bad NAFTA deal for Canadians and that’s what we are going to stay with.”

U.S. President Donald Trump – who signed a NAFTA side deal with Mexico last week – has threatened to impose auto tariffs on Canada or exclude it from the three-nation pact unless an agreement can be struck quickly.

Trudeau made clear, however, he would insist on keeping the so-called Chapter 19 dispute-resolution mechanism that Washington wants to scrap.

“We will not sign a deal that is bad for Canadians, and quiet frankly, not having a Chapter 19 to ensure the rules are followed would be bad for Canadians,” he said.

He also said existing protections that ban U.S. media firms from buying Canadian cultural industries such as television stations and newspapers must be maintained.

Legitimate Gripes and Plain Silliness

Trump has a legitimate gripe about dairy products, but the US sugar, corn, an ethanol lobbies are just as bad if indeed not far worse.

US tariffs on Canadian lumber are ridiculous. Housing is already slowing high prices for lumber do not help.

Canada ought to propose scrapping all tariffs but even if Trudeau made such a proposal, Trump would not accept it.