Prime Minister Justin Trudeau is not open to lifting Canada’s full package of retaliatory tariffs if United States President Donald Trump leaves any tariffs on Canada in place, according to a senior Canadian government official.

Trudeau’s government is cool to the idea of a “middle ground” settlement in the trade war floated by U.S. Commerce Secretary Howard Lutnick. In particular, any scenario where Canada has to fully rescind its retaliatory tariffs in return for a partial rollback of American tariffs will be rejected by the Canadian prime minister, said the official, speaking on condition they not be identified.

The official did not comment on whether Canada would scale back some of its retaliation measures if Trump pulls back on at least some U.S. tariffs. Trudeau and Trump are scheduled to speak Wednesday morning.

The Trump administration imposed 25 per cent tariffs on all Canadian imports to the U.S. on Tuesday, with the exception of energy products such as oil and natural gas, which have a 10 per cent rate. Trudeau’s government responded with levies against $30 billion in American products, including cosmetics, tires, fruit and wine.

Canada’s counter-tariffs will expand to an additional $125 billion in items from U.S. exporters later in March. The second phase includes a huge array of categories — including U.S.-made cars and trucks, aluminum, and a long list of food and agricultural products.

Lutnick told Bloomberg TV earlier on Wednesday that Trump is considering tariff relief for particular sectors, possibly including automotive.

“There are going to be tariffs — let’s be clear — but what he’s thinking about is which sections of the market that maybe he’ll consider giving them relief until we get to, of course, April 2,” Lutnick said. “I think it is going to be in the middle somewhere.”

Lutnick said the U.S. actions are not a trade war, but a “drug war” meant to stanch the flow of fentanyl into the U.S. and to bring down America’s rate of overdose deaths from the drug.

But Trudeau has rejected that premise, pointing to U.S. border agency statistics that show very small amounts of the drug are found by agents at or near the Canada-U.S. border.

In December, Canadian officials announced $1.3 billion in new border surveillance and security measures, and Trudeau has since added to it by devoting more money to the policing of organized crime and appointing a longtime senior cop as the country’s “fentanyl czar.”

“The excuse that he’s giving for these tariffs today of fentanyl is completely bogus, completely unjustified, completely false,” Trudeau said Tuesday in Ottawa. “What he wants is to see a total collapse of the Canadian economy because that’ll make it easier to annex us.”

Trudeau said Trump’s tariffs will lead to significant pain for the president’s own residents.

“He is rapidly going to find out, as American families are going to find out, that that’s going to hurt people on both sides of the border,” he said. “Americans will lose jobs, Americans will be paying more for groceries, for gas, for cars, for homes.”

Canadian Energy Minister Jonathan Wilkinson said Trump’s actions have permanently damaged the relationship between the two countries, who have a long history of deep partnership.

“Even if the tariffs are withdrawn, we will never go back to where we were three months ago,” Wilkinson said, speaking at an event in Toronto. “We will never trust the Americans in the same way that we did.”

With assistance from Monique Mulima and Erik Hertzberg.

Bloomberg.com