Trump just laid out his demands for 2 of the US's signature allies to get around his massive new tariffs

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President Donald Trump

• President Donald Trump suggested Monday that Canada and Mexico can be exempt from the new steel and aluminum tariffs if they agree to a "new & fair" North American Free Trade Agreement.
• The tweets come as the seventh round of negotiations on a new NAFTA deal wrap up in Mexico City.
• Canada and Mexico are two of the biggest sources of steel for the US.

President Donald Trump on Monday suggested his newly announced restrictions on steel and aluminum imports would be used as leverage in trade negotiations with Canada and Mexico.

Trump tweeted that the two signature US allies could avoid the tariffs, which act as taxes on imports, on steel and aluminum if the two countries agreed to a "new & fair" North American Free Trade Agreement, or NAFTA.

"Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed," Trump said. "Also, Canada must treat our farmers much better. Highly restrictive. Mexico must do much more on stopping drugs from pouring into the U.S. They have not done what needs to be done. Millions of people addicted and dying."

The tweet comes as the seventh round of negotiations on a new NAFTA deal wrap up in Mexico City on Monday. According to reports, negotiators have worked through around five of the 30 major issues that make up NAFTA. Many of the thornier sticking points have yet to be resolved.

The new US tariffs, which were announced Thursday and are set to be formalized this week, surprised the NAFTA negotiators and could add another wrinkle to already contentious talks.

While it's unclear what exactly would qualify as a "new and fair" deal for Trump, the president previously called NAFTA "the worst trade deal in history."

The steel tariff is particularly harmful for the two nations because they are two of the biggest sources of steel for the US. Canada is the largest importer of steel to the US, making up 16% of all imports, while Mexico has about 9% market share, ranking it fourth.

Given their close trade relationships with the US and large amount of steel exports, both countries were hoping to for exclusions from the restrictions. Peter Navarro, the director of the White House National Trade Council, said Sunday that there will be no exceptions to the new tariffs, which will add a 25% tax on steel imports and 10% on aluminum.