(MENAFN- Live Mint) US President Donald Trump on Friday terminated all trade talks with Canada, citing Ottawa's "egregious behaviour" over what he alleged was a "fake" television advertisement propagating anti-tariff comments by conservative former President Ronald Reagan.

The flashpoint came after the Canadian province of Ontario, under the leadership of Premier Doug Ford, began a television ad campaign in the US to raise awareness about the harmful effects of trade restrictions.

"Using every tool we have, we'll never stop making the case against American tariffs on Canada. The way to prosperity is by working together," Ford wrote, announcing the ad campaign that would go on to infuriate Trump.

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As the US President raged over the ad, the Ronald Reagan Presidential Foundation & Institute backed Trump, saying that it misrepresented the former Republican president's words.

The statement shared by the Ronald Reagan Presidential Foundation & Institute on Ontario's ad campaign.Was the Ronald Reagan ad 'fake'?

As it turns out, the ad was not fake, but edited.

On 25 April 1987, Reagan really did rail against tariffs: commenting on his decision to impose duties on Japan due to Tokyo's failure to honour a trade agreement on semiconductors, Reagan said, "Imposing such tariffs or trade barriers or restrictions of any kind are steps that I am loath to take."

"Over the long run, such trade barriers hurt every American worker and consumer," Reagan explained.

"In imposing these tariffs, we were just trying to deal with a particular problem, not begin a trade war," Reagan said solemnly, adding, "So next week, I'll be giving Prime Minister [Yasuhiro] Nakasone the same message."

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"We want to continue to work cooperatively on trade problems and want very much to lift these trade restrictions as soon as evidence permits," was the 'message'.

"We want to do this because we feel both Japan and the United States have an obligation to promote the prosperity and economic development that only free trade can bring," Reagan said.

In the same speech, Reagan also says, "Now that message of free trade is one I conveyed to Canada's leaders a few weeks ago, and it was warmly received there."

"Indeed throughout the world, there's a growing realization that the weight of prosperity for all nations is rejecting protectionist legislation and promoting fair and free competition," was Reagan's unequivocal assertion.

The ad campaign run by Ontario largely drew on the aforementioned comments, highlighting conventional economic wisdom vis-a-vis the imposition of tariffs.

By the time Reagan had become President, advanced economies had abandoned tariffs as an economic tool, based on the realization that trade restrictions increased domestic firms' reliance on government intervention, stifled competition, and sparked trade wars leading to more tariffs. The result? Job losses and reduced consumption for all parties involved. As the saying goes in economics, no one wins in a trade war.

Ad campaign paused to allow US-Canada talks to resume

Despite the veracity of the ad with regard to Reagan's comments, the campaign has since been paused to allow trade negotiations to resume between the two North American neighbours.

"Our intention was always to initiate a conversation about the kind of economy that Americans want to build and the impact of tariffs on workers and businesses," Ford said on Friday, announcing a pause in the campaign after a conversation with Prime Minister Mark Carney.

While the ad campaign has been paused, there has been no official reaction from the US thus far, vis-a-vis the resumption of trade talks with Canada.

Trade tensions between Washington and Ottawa have spiked since Trump took office for a second term in January this year, with the US President routinely threatening Canada's economy with tariffs and often infringing on its sovereignty with claims that the nation could become the "51st state" of the US.

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