No sudden moves - Canada sticks to measured tack in U.S. trade row

OTTAWA (Reuters) - Canada is sticking to its keep-calm strategy as U.S. President Donald Trump ramps up trade war rhetoric, convinced that no move is the best move for the country with the most to lose, but critics say it risks being a soft target if its strategy fails.

FILE PHOTO: Canada's Finance Minister Bill Morneau delivers the budget in the House of Commons on Parliament Hill in Ottawa, Ontario, Canada, February 27, 2018. REUTERS/Chris Wattie

While the European Union immediately drew up a list of U.S. products from bourbon to blue jeans to hit if Trump follows through on a plan to impose global duties on aluminum and steel, Canada has gone with equivocation.

“We’re going to make sure that we’re doing everything we need to do to protect Canadian workers, and that means waiting to see what the president actually does,” Prime Minister Justin Trudeau told reporters on Wednesday.

Minutes after Trudeau , White House spokeswoman Sarah Sanders said Canada and Mexico, and possibly other countries, may be exempted from the planned tariffs on the basis of national security.

Well-placed sources said Foreign Minister Chrystia Freeland and other senior Canadian figures have made many calls to U.S. policy makers over the last few days.

Freeland spoke on Wednesday to House of Representatives Speaker Paul Ryan, a prominent Republican critic of the tariffs proposal, said a Canadian government official. Trudeau himself called Trump on Tuesday.

CTV news said Canada’s ambassador to Washington would be having dinner on Wednesday with White House national security adviser H.R. McMaster. No one at the embassy was immediately available for comment.

From the outset, Trudeau has taken a decidedly sunny approach to the unpredictable president, launching an outreach campaign to save NAFTA one encounter at a time with as many U.S. lawmakers, governors and administration officials as possible.

The Liberal government’s approach is largely backed across the political and business spectrum but pressure is building to abandon the measured tone.

“Trump has already treated China and Russia with more kid

gloves than us. Why is that?” said John Weekes, Canada’s chief negotiator for the original NAFTA deal.

Weekes said Canada should draw up a long list of possible targets for retaliation, and publish it for public comment.

“I’d be the first to agree that retaliation is a mug’s game, but how do we help our allies in the United States make the case to change the course of policy?” he said.

Labor too, is demanding more action.

Jerry Dias, president of private-sector union Unifor, said the government’s keep-calm approach had been the right one up until Trump’s planned tariffs, but that Canada would look weak if it did not react.

“What are we supposed to do? They come after us on everything. So we can just continue to be perceived as nice Canadians - when we get hit we say ‘Thank you’ - or we can say ‘enough is enough’” Dias told reporters on Wednesday.

A source familiar with Canadian government thinking said retaliatory measures were “a live conversation going on at this moment” and would be deployed if the tariffs are implemented. Trump has linked the tariffs with ongoing NAFTA negotiations.

Beyond the divide-and-conquer strategy of the outreach tour in the United States, those close to the trade file say that dealing with Trump brings its own imperatives.

“We have to keep calm. It’s pointless talking in public about the ways you might retaliate until you have to act,” said a second source familiar with the issue who spoke on the condition of anonymity.

“As for people who stomp around and say ‘We will strike back’ – why would you do that? It just irritates the president.”

Additional reporting by Leah Schnurr and David Ljunggren in Ottawa and Nichola Saminather in Toronto; Editing by James Dalgleish