NAFTA talks to resume after late-night Canada-U.S. chat

US President Donald Trump's trade policy faces a key crossroads

Speaking at a rally in North Dakota on Friday, September 7, Trump said that if a NAFTA deal could not be reached between Canada and the U.S., he would be applying a 20% tariff on cars.

Recent reports suggest that Canadian Prime Minister Justin Trudeau may make some concessions on the dairy front, such as opening up access to the Canadian market for U.S. farmers.

Canada wants a permanent exemption from Trump's steel and aluminum tariffs, and removal of the threat of auto tariffs. I can - all I have to do is tax their cars, it would be devastating. "I can - all I have to do is tax cars - it would be devastating".

A block from the White House, where a furious Trump was Tweeting fire at the disloyalty from his inner circle, Freeland and Lighthizer pushed on with talks that cut to the core of North American prosperity.

Freeland offered few specifics, sticking to her mantra of not wanting to negotiate in public _ an agreement struck with the tough-talking Lighthizer as an act of good faith. "The ruination of the country", he stated. It'd be the ruination of the country. As the process grinds on, some in Washington insist Trump can not pull out of NAFTA without the approval of Congress. "We'll do it, we'll agree'".

Larry Kudlow, President Donald Trump's top economic adviser, told Fox Business that one issue is holding up a US-Canada trade deal: milk.

Trump appeared to set a deadline for a deal this week, prompting aides to U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland to work well into the evening on Thursday to find ways to move forward. Freeland left open the possibility of another meeting later on Friday. There was no deal reached Friday and the senior Canadian delegation is leaving Washington to return home, a Canadian government official said, speaking on condition of anonymity.

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There is no immediate deadline pressure on the two sides. Freeland has said there's progress, but that no deal is done until it's done.

While Kudlow harped on the dairy issue, much like his boss, other problems remain outstanding.

According to a report from Bloomberg News, Trump reiterated that Canada was taking advantage of the United States.

Trump has already imposed hefty tariffs on Canadian and Mexican steel and aluminum, using a section of US trade law that gives him the authority in the name of national security. It also wants to end the Chapter 19 arbitration panels for resolving disputes over anti-dumping tariffs, something Canada has used to defend its lumber exports to the United States, despite USA charges that Canadian lumber is unfairly subsidized. "We do need Chapter 19". "We'll see what happens", he said.

The talks in Washington are focused on Canada's dairy supply system, which the United States says hurts its exports, Ottawa's desire to keep NAFTA's Chapter 19 dispute resolution mechanism and Canadian media laws that favor domestically produced content.

Daniel Dale is the Star's Washington bureau chief. But if it doesn't, the US can live with that.

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