What exactly was said behind closed doors we may never know, but shortly after the G7 meeting  held at Charlevoix, Quebec, both Prime Minister Justin Trudeau and U.S. President Donald Trump made very public statements signalling an escalation of trade friction between the two countries.

Trump’s annoyance with Canada’s supply management system (at least when it comes to dairy) is no secret, but it seems the entire NAFTA re-negotiation arguments have become a melting pot of national security, steel, automobile manufacturing, and milk, as he tweeted:

And then this tweet, where Trump says the U.S. steel and aluminum tariffs are a response to Canada’s 60-year old supply management system for dairy, countering his administration’s official national security justification:

“Canadians … stood shoulder to shoulder with American soldiers in far off lands in conflicts from the First World War onward,” noted Trudeau in a press conference at the end of the G7 leaders meeting.

“It’s kind of insulting,” he said, referring to U.S. tariffs against Canada and Canada’s decision to implement retaliatory tariffs. “Canadians, we’re polite, we’re reasonable, but we also will not be pushed around.”

While Trump is close in his oft-quoted and cherry-picked reference to Canada having a 270% tariff on dairy (it varies depending on dairy product category), it should be noted the high tariffs are only applied after Canada’s import allowances are filled. The high tariffs don’t apply to all imports. Many in the Canadian dairy industry, as well as some Canadian politicians, are countering by pointing out how the U.S. subsidizes its dairy industry.

Canada has recently offered to concede increased tariff-free dairy access in the NAFTA negotiations, but the offer didn’t go far enough, according to U.S. Ag Secretary Sonny Perdue.

Further threats regarding tariffs also surfaced following the G7 meeting. Trump is taking aim at Canada’s auto manufacturing sector, one worth about $20 billion to Canada’s gross domestic product and nearly half a million direct and in-direct jobs, according to Canadian Vehicle Manufacturers Association.

Politicians across the political spectrum, including federal Conservative leader Andrew Scheer, Alberta conservative leader Jason Kenney, and Ontario’s conservative premier-designate Doug Ford, have voiced their support for Trudeau and his message at the G7 summit.

“I can tell you on the trade deal south of the border, we stand shoulder to shoulder with the prime minister and our federal counterparts. My number one priority is to protect jobs in Ontario,” Ford told reporters on Sunday.

“I’m in complete agreement with the Prime Minister’s statement. A reasonable, balanced and firm assertion that Canada will not be bullied,” tweeted Kenney.

Regardless of the tariff talk, one thing is for certain: Trump’s comments indicate Canada’s auto sector is potentially in the cross-hairs, and apparently it’s related to dairy access. If that’s the case, that’s a trade concession dairy farmers can’t win.

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