Canada hits back on US tariffs

Trump also denies planning to pull out of WTO

US President Donald Trump speaks to the press aboard Air Force One en route to Bedminster, New Jersey, from Joint Base Andrews, Maryland, U.S., June 29, 2018. Eric Thayer / Reuters

Canada struck back at the Trump administration on Friday over US steel and aluminum tariffs, vowing to impose punitive measures on $12.63 billion worth of American goods until Washington relents.

Rising trade tension between Canada and the United States and a pushback from US businesses on further tariffs, including on imported autos, pressured a White House that has championed an "America First" protectionist stance since Trump took office in January 2017.

But president Donald Trump denied he is planning to withdraw the United States from the World Trade Organisation.

"I'm not talking about pulling out," he told reporters on Air Force One when asked about reports he was planning an exit from the global trading body. However, said the WTO had treated the US "very badly."

Mr Trump has branded the WTO a "disaster" and flouted international trade norms by hitting key allies with stinging tariffs, and imposing crippling fees on Chinese goods in the name of US national security.

Secretary of the Treasury Steven Mnuchin lashed out against a report by the Axios news website that said Trump frequently told advisers he wanted the United States to quit the WTO, a move that could devastate global commerce. The report cited people involved in discussions with the president.

"This is an exaggeration," Mr Mnuchin said. "The president has been clear ... he has concerns about the WTO, he thinks there's aspects of it that are not fair, he thinks that China and others have used it to their own advantage, but we are focused on free trade. That's what we're focused on - breaking down barriers."

Canada's retaliatory tariffs, effective on July 1, largely target US steel and aluminum products, along with foodstuffs such as coffee, ketchup and whisky, according to a list released by Canada's Finance Department.

"We will not escalate and we will not back down," Canadian Foreign Minister Chrystia Freeland told reporters at a Stelco Holdings Inc plant in the steel city of Hamilton, Ontario.

The measures are designed to pressure Trump by focusing on goods from states where his Republican party is fighting to hold Congressional seats in the November midterm elections. They were announced just as America's largest automaker warned that overly broad tariffs could isolate U.S. businesses and cut jobs.

The Trump administration in May launched an investigation into whether imported vehicles posed a national security threat. Mr Trump has repeatedly threatened a 20 per cent import tariff on vehicles.

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His moves have led to concerns among some of America's biggest firms. In comments filed with the U.S. Commerce Department, GM Motors said expansive tariffs could "lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — US jobs."

GM, which makes many vehicles for the US market in Mexico and Canada, said the tariffs could hike vehicle prices and reduce sales.

Even if automakers opted not to pass along higher costs to consumers, "this could still lead to less investment, fewer jobs, and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies," GM said.

Canada's Freeland called the idea of auto tariffs "absolutely absurd." US officials have linked the tariffs to slow progress in talks to modernise the North American Free Trade Agreement, which Trump says is a disaster and must be changed.