Canada is fighting mad and ready to sue over President Donald Trump’s decision Monday night to subject Canadian softwood lumber exports to tariffs of up to 24 percent.
A joint statement from Canadian Global Affairs Minister Chrystia Freeland and Natural Resources Minister Jim Carr says the tariff is “unfair and punitive duty” and the result of “baseless and unfounded” rhetoric from the Trump administration.
They say the tariffs will cause unemployment on both sides of the border and raise the price of a U.S. home.
The ministers promised that Canada “will vigorously defend the interests of the Canadian softwood lumber industry, including through litigation.” But they expressed hope and “remain confident that a negotiated settlement is not only possible but in the best interests of both countries.”
Trump’s announcement prompted a drop in the Canadian dollar as it fell below 74 cents U.S.
The president announced the tariff in front of a group of journalists, who tweeted out the news.
That was followed by an official announcement by the Commerce Department that countervailing duties amounting to three to 24.1 percent were on the way for Canadian lumber produces.
The move caps the worst week of anti-free trade rhetoric yet experienced between Trump and a Canadian Liberal government that has been publicly siding with Trump on foreign policy issues and privately lobbying hard behind the scenes with top cabinet members. Trump started on “unfair” trade with Canada last week after a visit with Wisconsin dairy farmers, whom he claimed were the big losers in the cross-border milk trade.
“It has been a bad week for U.S.-Canada trade relations,” said Commerce Secretary Wilbur Ross, suggesting that “it became apparent that Canada intends to effectively cut off the last dairy products being exported from the United States.”
He said the Commerce Department “determined a need” to extract duties of “roughly one billion dollars” from Canadian lumber producers.
Ross continued to lash out at NAFTA, saying “This is not our idea of a properly functioning Free Trade Agreement.”
The “countervailing duties” are a response to what the U.S. says are hidden subsidies on Canadian lumber. Some Canadian economists anticipated a tariff that was even higher. Canadian Imperial Bank of Commerce analyst Hamir Patel suggested the U.S. might attempt to place a tariff on Canadian lumber that was between 45 and 55 percent.
Kevin Mason, managing director of ERA Forest Products Research told the Financial Post, “It definitely could’ve been a heck of a lot worse. I think a lot of people were bracing for a higher duty.”