The Prime Minister made the dramatic comments during a meeting of senior Canadian officials as trade talks with the US remain deadlocked.
According to The Toronto Star, Mr Trudeau said: “We will not sign an unfavourable deal.
“We’d prefer to not sign a deal.”
NAFTA talks between the US and Canada made little progress on Wednesday.
Disputes continue over US access to Canadian dairy and cultural markets.
The meeting of top Canadian officials reportedly lasted an hour and a half.
Those attending included lead negotiator Steve Vermeil and Ambassador to the US David MacNaughton.
There are signs that support for Mr Trudeau among Canadian provincial leaders, which until recently had remained solid, may be wavering.
Scott Moe, Premier of Saskatchewan province, told reporters he is worried about the talks after a meeting with Mr Trudeau.
He said: “We cannot move forward with a bad deal.
“I’m not certain we can move forward with no deal either.”
Mr Moe added that his province sends 55 percent of its exports to the US, and receives 85 percent of its imports the country as well.
During the 2016 presidential election campaign, Donald Trump stated: “A Trump administration will renegotiate NAFTA and if we don’t get the deal we want, we will terminate NAFTA and get a much better deal for our workers and companies.”
Last month Trump announced a new US-Mexico trade deal to replace NAFTA which he said would be “incredible for both parties”.
He is reportedly seeking a similar arrangement with Canada.
After the US-Mexico deal was agreed, Trump stated: “One way or the other, we have a deal with Canada.
“It’ll either be a tariff on cars or it will be a negotiated deal.
“Frankly, a tariff on cars is a much easier way to go but perhaps the other would be much better for Canada.”