Canada PM safe for now as Trump attacks, but angry farmers loom

OTTAWA (Reuters) - Canadian Prime Minister Justin Trudeau, facing the threat of a trade war from U.S. President Donald Trump, has unanimous domestic support for now but to keep a firm hold on power must wring concessions from an unwilling powerful dairy lobby in order to mollify Washington.

FILE PHOTO: Canada's Prime Minister Justin Trudeau walks to the podium to address the final news conference of the G7 summit in the Charlevoix city of La Malbaie, Quebec, Canada, June 9, 2018. REUTERS/Yves Herman/File Photo

Trudeau, who over the last year has faced increasing criticism for backtracking on promises, ordering endless consultations on major topics and failing to fulfill many of his campaign commitments, had taken a tougher stance against the United States in recent weeks.

Trudeau, facing elections in 2019, said on Sunday that Canada “will not be pushed around”, triggering a fierce attack from Trump and his advisers.

Trump is particularly incensed by Canadian tariffs imposed on dairy products, which he says are “killing” U.S. farmers.

He and other U.S. politicians have long demanded Canada’s system of domestic dairy protections either be abolished or heavily modified to give American exports a bigger share.

But Trudeau - like many prime ministers before him - has little room for maneuver. Dairy farmers, who number about 11,000, have an outsized influence in Canadian politics, being concentrated in the vote-rich provinces of Ontario and Quebec.

The Dairy Farmers of Canada lobby group, which had earlier voiced the suspicion Trudeau might try to sell them out, met the prime minister for 25 minutes on Tuesday and said he had reassured them of his backing.

“It was a very good meeting ... he reaffirmed his support for dairy producers all across Canada. He wants strong dairy production for the next generation,” Pierre Lampron, president of the group, told reporters.

Lampron later told Reuters that the two sides had not discussed potential financial support for the sector. Ottawa says it is discussing how it could help steel and aluminum workers affected by the recent imposition of U.S. tariffs.

Canada’s dairy sector is heavily sheltered under a government system which controls how much they produce but also sets prices that are far above those in the United States for domestic consumers. The system falls outside of the North American Free Trade Agreement.

Canada’s parliament unanimously condemned the personal attacks on Trudeau on Monday.

“I think it is good for him in the short term. The longer term is not nearly as clear,” said Ekos pollster Frank Graves.

“Trade wars are never good for the respective combatants and if this escalates it could have very deleterious economic impacts.”

Trudeau’s Liberals are tied with the main opposition Conservatives in polls. A trade war, and the resulting massive job losses, would be a political failure for the 46-year-old prime minister who came to power in late 2015 promising to improve ties with Washington.

He could mitigate the damage by offering aid packages to affected industries although the bill would most likely run into many tens of billions of dollars.

Trudeau says Trump’s demands are in part linked to talks to update NAFTA. Trump, who has frequently threatened to walk away from the pact, is now threatening tariffs on auto imports.

People close to the prime minister reject the suggestion he misread Trump and cite what they say is the president’s highly unpredictable nature.

“Even if we gave him everything he wanted - and there is no way we would ever do that - who can say whether he’d be satisfied?” said one source, who declined to be identified given the extreme sensitivity of the situation.

Among the many uncertainties is how far Trump is prepared to match his tough words with action.

“When it comes to Trump tweets there’s a discount premium to them,” said Carleton University professor and foreign policy expert Fen Hampson who advises Trudeau to “hunker down, say nothing, not rise to the bait”.

Hampson noted former Canadian prime minister Brian Mulroney, who pressured Washington for years on the need for a treaty to curb acid rain, only succeeded when George H.W. Bush replaced Ronald Reagan as president.

Assuming Trump will be gone soon may not be wise. Under one scenario being studied by Canadian officials, he wins the next election and stays in power until 2025.

Reporting by David Ljunggren in Ottawa; Additional reporting by Roberta Rampton in Washington; Editing by Amran Abocar and Matthew Lewis