Canada threatens to play hardball with Trump over lumber tariffs

"The duties are an essential step to make sure we don't lose more jobs", said Zoltan van Heyningen, executive director of the U.S. Lumber Association.

Stocks in Canadian lumber firms, which rose on Tuesday on market relief that the duties had not been higher, posted more mixed results in early trading on Wednesday.

"You need our lumber to build your homes", said Canadian Foreign Minister Chrystia Freeland.

But a Canadian readout of the conversation struck a very different tone, hitting out at "baseless allegations" over its softwood lumber industry and vowing to "defend Canada's interests" over the dairy industry.

U.S. Commerce Department officials say it's been a tough week for trade relations with Canada.

Trump's remarks came after he had been contacted by the governors of NY and Wisconsin about a pricing policy that sees Ontario dairy producers sell ultra-filtered milk to Canadian processors at prices that are competitive with worldwide rates.

Secretary of Commerce Wilbur Ross told reporters Canada wasn't being a "good neighbor", accusing the country of "dumping lumber" on the USA market.

"Our action plan on softwood starts with fighting the unfounded claims of the US lumber production lobby and the unwarranted and unfair duties placed on Canadian lumber products", said Christy Clark, Premier of British Columbia.

That's how Stephen Colbert began a monologue about Canada's brewing trade conflict with the United States, which escalated with the announcement of a 20 per cent tariff on imports of Canadian softwood lumber. The Prime Minister reaffirmed that Canada upholds its global trade obligations, including the North America Free Trade Agreement, under which the USA continues to have duty-free and quota-free access for milk protein substances, including diafiltered milk, and that Canada would continue to defend it's interests.

The relations between the two biggest neighbors in North America deteriorated after the Trump administration in the United States made a decision to impose countervailing duties ranging from 3-24 percent on five Canadian lumber exporters to the United States.

Donald Trump put on a tariff.

"Politeness is something we believe is a national virtue, but it's not an accident that hockey is our national sport", she said. "There is a deal to be had ... but we are also absolutely prepared to fight this out in the courts".

He said Canada imports over $550 million of dairy products from the United States, but exports just over $110 million to the country.

But the Fitch Ratings agency said the tariffs should not result in material pressure for USA homebuilders, given that the increased cost per house would be around $850.

  • Zachary Reyes