For much of the past week, Canada has been a punching bag for Trump.
The president has threatened to move ahead on a deal with Mexico, and without Canada.
Before heading in to meet with U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerMcConnell urges GOP senators to call Trump about tariffs Companies brace for trade war MORE, Canadian Foreign Minister Chrystia Freeland told reporters that the U.S. and Canada had worked over the weekend and she was looking forward to constructive talks.
The North America Free Trade Agreement, or NAFTA, underpins $1.2tn of trade between the US, Canada and Mexico. "Canada's the main trading partner for many states, quite a bit of our economic fortunes are entwined with Canada". But the prime minister noted Canada has shown "a certain amount of flexibility in signing other trade deals".
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Trump called NAFTA a "stupid deal" for the US causing millions of American jobs to leave the country.
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The tone of the NAFTA renegotiation "has painted the U.S. as an antagonist that has to be handled", he says. US stocks were poised for modest losses at the open with Dow futures and the broader S&P; 500 futures 0.3 percent lower.
While the Trudeau government has rejected Trump administration criticisms of Canada's high tariffs on dairy products, it has not explicitly stated that supply management - now a hot-button issue on Canada's political scene - is non-negotiable.
Data released yesterday showed the USA trade deficit hit a five-month high of US$50 billion.
While U.S. officials have indicated that they are prepared to go ahead and sign a NAFTA deal only with Mexico, the U.S. business community and many lawmakers have insisted that the NAFTA deal should remain a trilateral pact.
Though the United States president often threatens to withdraw from Nafta, the latest pledges are piling up pressure on negotiators who are trying to wrap up more than a year's worth of talks and strike a deal that could be signed before 1 December.
NAFTA's Chapter 19 allows companies who feel wronged by anti-dumping, or countervailing duties, to have their issues settled by independent panels of experts from the countries caught in the dispute. Bruno Larue, agricultural economist at Laval University, discusses why it may be time to modernize Canada's system.
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"We are going to continue to negotiate in good faith", he said, adding he believes a "win-win-win" outcome is possible for the U.S., Canada, and Mexico.
The two major trading partners spent most of last week trying to whittle down and resolve the toughest issues ahead, such as more US market access to Canadian dairy, intellectual property protections and dispute settlement rules. The chapter has been repeatedly used by Canada to fight US tariffs on softwood lumber.
There are however a number of contentious issues in the U.S. -Canada pact that served as a precursor to NAFTA as well as the early 1990s NAFTA negotiations.
Trump has notified Congress that he intends to sign a trade deal reached last week with Mexico by the end of November and officials said the text would be published by around October 1. -Canada negotiations before then could put things back on track.
Freeland sounded upbeat as she emerged from a day of talks with top USA trade negotiator Robert Lighthizer, although she cautioned that no trade deal was done until the last issue was nailed down. She didn't elaborate, and the White House didn't respond to questions about Trump's trade strategy.
Canadian Prime Minister Justin Trudeau pivoted during high-stakes negotiations on the North American Free Trade Agreement this week; saying he can't sign-on to any deal that doesn't protect Canada's "culture" and history. This could provide ammunition to Trump, who has accused Canada of "cheating" Americans.
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The two sides are also arguing over USA demands for more access to Canada's closed dairy market. "Concede and hope that the behavior will improve, or resist in the hope that rational voices in Congress and business will constrain the president's worst impulses".