Freeland has been negotiating in Washington since last week.
Freeland did not say whether the negotiations would continue later Friday or next week.
"They are continuing to push toward a conclusion of that agreement. If we don't make a fair deal for the USA after decades of abuse, Canada will be out".
"We are engaged in an exercise to try to save the best of NAFTA and that's kind of unfortunate, but everybody knows what we are facing in the White House these days", John Manley, president of the Business Council of Canada and a former federal cabinet minister, said by phone on Friday. In its recent trade deal with the European Union, Canada made concessions on dairy imports.
"The word that continues to block the deal is M-I-L-K", Kudlow told FOX Business' Stuart Varney. "Milk, dairy, drop the barriers, give our farmers a break, and we can fix some other things".
Canada also wants a permanent exemption from Trump's steel and aluminum tariffs, and for Washington to eliminate the threat of USA auto tariffs. Freeland has said there's progress, but that no deal is done until it's done.
Freeland expressed optimism late Wednesday.
Freeland offered few details, sticking to her mantra of not wanting to negotiate in public - an agreement struck with Lighthizer as an act of good faith.More news: Flight 93 'Tower of Voices' Memorial Dedicated on Eve of 9/11 Anniversary
Freeland departed the headquarters of the United States Trade Representative for the Canadian Embassy for several hours of consultations.
A US official told Reuters on Thursday that Canada needed to move further on dairy.
Flavio Volpe, the president of the Canada's Automotive Parts Manufacturers' Association, said he didn't think the latest bombshell would directly affect the negotiators inside the room.
US & Canadian negotiators have yet to come to an agreement surrounding NAFTA, after expressing disputes over issues around dairy quotas, protection for Canadian media companies, and future trade dispute resolution. But those talks excluded Canada, the third NAFTA country.
Trump, speaking Friday in North Dakota, said he believes Canada is ripping off the US and repeated that, if a deal can't be reached, he'll apply a 20 per cent tariff on cars.
In NAFTA negotiations, the U.S. made increased access for American dairy farmers a major goal.
The hope is for a trilateral agreement in principle that Congress can approve before Mexico's new president takes office on December 1.
On August 31, the Trump administration notified the US Congress of his intention to sign a trade agreement with Mexico, which Canada could enter. Time is on our side, a NAFTA agreement without Canada will not work, and, perhaps most importantly, American businesses big and small want to maintain strong, mutually advantageous trade and commerce relations with Canada. "And now they've got to treat us fairly". "We've made it clear to the Prime Minister that there [should] be no negative consequences out of this negotiation".
Trump almost tore up the NAFTA pact past year after visiting farmers in Wisconsin, a major USA dairy producer that Washington says has been hurt by Canadian protectionism. A day earlier, she said "Canada is focused on Canada" when pressed on the importance of deadlines. Another 5 per cent is allowed in tariff-free through trade with the USA and other countries.