Canadian Manufacturing

Lumber allegations ‘baseless,’ Trudeau tells Trump, as Canada prepares for trade war

A "thickening" border will hurt both countries the prime minister said, while the Trump administration fanned the flames of its latest trade spat



The two leaders met at the White House earlier this year. Though the summit went smoothly, Trump recent trade rhetoric and the U.S. Commerce Dept.’s lumber duties decision has increased tensions

OTTAWA—Prime Minister Justin Trudeau says the Canada-U.S. relationship is bigger than any one trade irritant—and that both countries would suffer from a “thickening” border.

Trudeau was responding to the U.S.’s plan to impose significant duties of up to 24 per cent on lumber imports—the latest flare-up in Canada’s escalating trade skirmish with the Trump administration.

Speaking in Kitchener, Ont. April 25, Trudeau said it’s true Canada has a deeply interconnected economic relationship with the U.S., but that the opposite is also true. Millions of good U.S. jobs depend in Canadian trade, he said, citing the North American auto sector as one compelling example.

Later in the day, the prime minister took a slightly harder line while speaking to Trump over the phone.

Trudeau said he told the president that the U.S. Commerce Department levelled “baseless allegations” when it imposed new, unfair duties on Canadian softwood. The comments echo a federal government statement released Monday saying the the accusations are “unfounded” and Canada plans to fight the duties in court.

Trudeau added that the two countries’ friendly relationship means both sides will be able to work through any dispute.

Meanwhile, Foreign Affairs Minister Chrystia Freeland shot back at Donald Trump’s anti-Canadian trade rhetoric—including a fresh broadside aimed at the dairy industry—saying she will be “tough and strong” in fighting for Canada’s economic interests with the U.S.

A pair of former U.S. trade envoys also hit out at Trump Tuesday, calling his trade remarks ‘goofy’ and ‘unbecoming.’

Freeland said she is optimistic a new softwood lumber deal can reached, and that it will be a win for Canada and the United States.

Freeland says she has had discussions with Commerce Secretary Wilbur Ross in recent days and some progress has been made, but there’s no sign of a deal yet.

Ross has said that lumber and dairy have erupted as irritants because they are not properly addressed in the North American Free Trade Agreement, which Trump has threatened to scrap if it can’t be renegotiated.

Freeland says the U.S. is dependent on Canadian softwood because its own industry can’t meet its domestic demand.

“Lumber prices are high right now, and the reality is the United States needs our lumber,” she said. “Middle class Americans who want to buy a house need Canadian lumber to do that.”

Lumber and dairy are long-standing irritants—and were also a problem file under previous presidents. In softwood lumber, the countries have a once-a-decade cycle of tariffs, trade litigation, and ultimately settlements.

The softwood spat is unfolding amid a much bigger trade issue—the renegotiation of the North American Free Trade Agreement. Despite remarks from the president and his cabinet secretary, neither lumber nor dairy are actually part of the current NAFTA. However, different actors would be pleased to add provisions on one or the other.

What comes next on softwood is a study of separate anti-dumping duties, followed by a final verdict by the U.S. Commerce Department as early as Sept. 7, and then one of three possible outcomes: a negotiated agreement, a surprise retreat from the U.S. government, or a potential years-long court battle.

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