The pending announcement has Europe, Mexico, and Canada all threatening retaliation, and trade analysts fearing an escalating tit-for-tat that undermines the global rules-based system. Trump has threatened to pull out of NAFTA, believing it has been unfair to American workers.
Trump last week announced that he would be imposing tariffs of 25 percent on all imported steel and 10 percent on aluminum to protect domestic industries, citing a rarely-invoked national security section of U.S. trade law.
There's a final scramble on to spare Canada from the impact of the US tariff plan, which could be announced as early as Thursday.
The tariffs were aimed at China, which has been dumping cheap, subsidized steel into the US and undercutting American producers who have been forced to slash production and jobs. The European Commission is preparing punitive tariffs on US exports from motorcycles to Kentucky bourbon, according to European Commission President Jean-Claude Juncker.
While ministers from Mexico, Canada and the United States met in the Mexican capital to culminate the 7th round of negotiation of the North American Free Trade Agreement (NAFTA), the president was on the offensive.
"The renegotiation of NAFTA has caused a lot of uncertainties but the best course of action is to develop a plan to ensure that your business continues to thrive, no matter what the outcome", says Dean Elliott, managing partner, central group and markets strategic lead with BDO Canada. "It's a 25-year-old-plus trade agreement, so that makes sense".
"We are definitely going to end up with these tariffs, and we're going to roll this out very, very quickly", Mnuchin told Fox Business.
A federal government source with knowledge of the trade file said, however, that if the US does impose the tariffs, Canada's reaction will be swift, and suggested a list of targeted actions is being considered.
French President Emmanuel Macron said yesterday that the European Union must "react quickly" to U.S. plans for tariffs, which he said clearly breached global trade rules.
"Given an ongoing renegotiation of NAFTA and a lack of USA withdrawal we think there are pretty good conditions for sustained loonie strength", said Ranko Berich, head of market analysis at Monex Canada and Monex Europe. The tariff talk "is doing no service to the loonie" BMO economist Robert Kavcic said in a note to clients early Monday. White House aides have been unable to provide any details about the coming tariffs after Trump circumvented the administration's policy process by announcing he would impose the tariffs. And that is where the tariffs and the possibility of a trade war are hitting so much closer to home in all three countries involved in the NAFTA talks.
On Monday, representatives from the three countries chose to highlight the progress achieved so far. "We haven't seen a new automotive plant in Canada in I can't remember how long".
The three sides aimed to hold talks as soon as possible to continue addressing a US proposal to raise the amount of North American content used under NAFTA, Smith said. "So it doesn't look good when it all comes out of China, so they send it through other countries and it comes to us", he said. "I have no reason to think he's going to change".