Canada steps up campaign against possible U.S. border tax

OTTAWA (Reuters) - Canada stepped up its campaign on Thursday against a possible move by Washington to impose border tariffs, telling the new U.S. commerce chief that such a move would hurt both countries.

Canada's Foreign Minister Chrystia Freeland speaks during Question Period in the House of Commons on Parliament Hill in Ottawa, Ontario, Canada, March 6, 2017. REUTERS/Chris Wattie

Canadian Foreign Minister Chrystia Freeland made the comments in a call with U.S. Commerce Secretary Wilbur Ross, her office said in a statement. It was the first time the two had spoken since Ross was confirmed by the U.S. Senate last week.

Canada sends 75 percent of its exports to the United States and could be badly hurt by a border tariff.

Freeland and Ross will be in overall charge of their nations’ negotiating teams at talks to update the North American Free Trade Agreement, a 1994 pact that U.S. President Donald Trump says has been a disaster for U.S. jobs. NAFTA also includes Mexico.

Trump is studying a Republican proposal in the House of Representatives for a border tax adjustment system that would levy a 20 percent tax on all imports while exempting exports.

“The Minister raised the potential implications and costs of any U.S. border adjustment tax on both American and Canadian businesses and families,” said the statement from Freeland’s office.

The U.S. Embassy in Ottawa was not immediately available for comment.

Freeland met with U.S. Secretary of State Rex Tillerson last month and told reporters afterward she made clear to him that Canada would oppose the idea of border tariffs, adding: “If such an idea were ever to come into being, Canada would respond appropriately.”

Ross said on Wednesday that substantial negotiations to revamp NAFTA would likely not get started until the latter part of this year.

Freeland also stressed to Ross the importance of trying to settle a long-running dispute over Canadian exports of softwood lumber, and the benefits of the integrated Canada-U.S. steel industry, the statement from her office said.

Reporting by David Ljunggren; Editing by Peter Cooney