OTTAWA—A backdrop of new hostility is hurting chances for Washington and Ottawa to successfully overhaul the North American Free Trade Agreement, say people close to the talks, even as Canada has vowed to forge ahead with the negotiations.
Before this past weekend’s Group of Seven leaders’ summit, the fate of Nafta was on shaky footing following the U.S. decision to impose tariffs on Canadian- and Mexican-made steel and aluminum products on national-security grounds. Both Canada, the largest foreign supplier of both metals...