OTTAWA -- U.S. President Donald Trump is accusing Canadians of buying goods in the U.S. and smuggling them home across the border because of tariffs while pledging that Canada will no longer "take advantage" of the U.S.

Speaking to the National Federation of Independent Business in D.C., Trump cited a story in a "major newspaper" about Canadians travelling to the United States and "smuggling things back in to Canada because the tariffs are so massive." It was not immediately clear which report he was referring to.

Trump said the tariffs on common items in Canada are “so high” that Canadians buy products, such as shoes, and wear them and “scuff ‘em up” to smuggle them across the border.

The U.S. president appeared to confuse duties, a longstanding fee on items purchased abroad, with Canada’s recently proposed tariffs, which are not in effect until July 1. Notably, Canada does not plan to put a tariff on shoes.

During his remarks, Trump said Canada likes to talk, and cited what he called the "tremendous" trade deficit the U.S. has with Canada. He once again floated going for bilateral trade deals with Canada and Mexico, rather than modernizing NAFTA.

His comments come amid an ongoing trade and diplomatic spat.

Canada has pledged $16.6 billion in countermeasures to respond to U.S. tariffs on Canadian steel and aluminum. The dollar-for-dollar retaliations are on imports of steel, aluminum, and other products from the Unites States, including a wide-spanning list of goods such as coffee, chocolate, condiments, toiletries, beer kegs, whiskies, various household items, and motorboats.

These tariffs are not set to come into effect until July 1, as consultation on the final list ended late last week.

Trump expressed hope about resolving the ongoing dispute, but pledged: "Canada is not going to take advantage of the United States any longer."

"We have to change our ways. We can no longer be the stupid country, we want to be the smart country. So hopefully we’ll be able to work it out with Canada," Trump said.

Asked about Trump’s comments on his way out of a cabinet meeting, Public Safety Minister Ralph Goodale said he had not heard Trump’s allegation, but said that he has every confidence in his border officers.

“The CBSA does an extraordinary job of administering the border from the Canadian side. There are 400,000 people that go back and forth across that border every single day, there’s $2.5 billion in trade that goes back and forth across that border every day,” Goodale said.

As Trump delivered his speech, Foreign Affairs Minister Chrystia Freeland began testifying at a House of Commons committee on the current state of the Canada-United States trade relationship.

Freeland said Canada’s proposed tariffs on American-made goods were strategically chosen to have “minimal impact on Canadians.”

“We have sought where possible to avoid intermediate goods and we have sought to put on the list products which can be easily sourced from either Canadian or non-U.S. suppliers,” Freeland said.

Freeland once again hit back against the Trump administration’s suggestion that Canadian-made steel and aluminum poses a national security threat to the U.S., calling the idea absurd and “insulting.”

“We know that no one will benefit from this beggar-thy-neighbour approach to trade. The price will be paid, in part, by American consumers and by American businesses. And I think we all agree that it is important for Canada to stand up in defence of the international rules-based order, and we will do so.”

Freeland testified with Canada’s chief NAFTA negotiator, Steve Verheul, seated beside her. Freeland said the tariff dispute is separate from ongoing NAFTA negotiations, and she insisted that a “win-win-win” deal between Canada, Mexico and the U.S. is still “possible.”

“And we continue to work hard – and patiently – to achieve this outcome,” Freeland said, adding that the federal government will be working on negotiations throughout the summer.

Freeland also thanked federal politicians and Canadian premiers, including Ontario’s premier-designate Doug Ford, for their support. She said the national unity “sends a powerful message to the United States.”

Because Canada’s economy is significantly smaller than the U.S. economy, Canadians have more to lose in the event of a trade war, says Ian Lee, an associate professor of business at Carleton University.

“If we do proceed, this is going to hurt us a lot more than it hurts the United States if both proceed down the road to retaliatory tariffs,” Lee told CTV News Channel on Tuesday.

Lee acknowledged the outpouring of support for the federal government’s approach, but he said Canada is “absolutely dependent” on cross-border trade. Imposing tariffs on American-made goods would be “much more damaging” for Canada, he suggested.

“I know there’s that feeling of rally around the prime minister right now to stand up the to bully, but I think we’re going to have to be a lot more strategic about this. And the idea of cutting off our nose to spite our face is not something I think is a good strategy,” Lee said.

Fears of a full-fledged international trade war deepened Tuesday as Trump planned to slap punishing tariffs on another $200 billion of Chinese imports. Those are on top of 25 per cent tariffs on $50 billion in Chinese goods that Trump already floated.

Chinese officials described Trump’s latest broadside as an "act of extreme pressure and blackmail” and threatened retaliatory "comprehensive measures” that could penalize American companies.

Lee said Trump’s hardline approach is an attempt to undercut a shift in global power to China.

“I think this is really a geopolitical struggle for dominance for the next quarter century. In other words, both China and the U.S. are determined that they’re going to be the world leaders in the most important industries of tomorrow – aerospace, artificial intelligence, of course computing,” he said.

“And so this is not an easily resolved trade dispute.”

As for Trump’s shoe smuggling accusation, the Footwear Distributors and Retailers of America tweeted directly to Prime Minister Justin Trudeau Tuesday saying Canadians are welcome to keep buying shoes across the border.

“As many as you want – and scuff them up if you want, we can sell you more!” the group said.

With files from The Associated Press