Has the US started a lumber trade war with Canada?

The United States is slapping hefty new tariffs on the import of Canadian softwood lumber.

The US Commerce Department says that Canada is improperly subsidising its exports of the forestry product.

This is just the latest volley in the long-running lumber trade dispute between the two countries.

It also comes during a sensitive time in US-Canada trade relations, with North American Free Trade Agreement talks on the horizon.

US President Donald Trump has been sending Canada mixed messages on trade, initially offering assurances that Nafta will only need “tweaks” but recently singling out Canada’s softwood lumber and dairy industries for criticism.

As US Commerce Secretary Wilbur Ross said in a statement: “It has been a bad week for US-Canada trade relations”.

On Monday, the US imposed an overall 20% tariff on Canadian softwood lumber.

Five exporters each face specific countervailing duties, which are meant to level the playing field between domestic producers and government-subsidised foreign producers of a product, ranging from 3.2% to 24.12%.

The US has long claimed that Canada is unfairly and illegally subsidising its lumber industry by charging minimal fees to log public lands.

Canada vows it will “vigorously defend” the interests of Canada’s softwood lumber industry, including through litigation.

Natural Resources Minister Jim Carr and Foreign Affairs Minister Chrystia Freeland said in a joint statement that Canada “disagrees strongly” with what they called “an unfair and punitive duty”.

Susan Yurkovich, president of the British Columbia Lumber Trade Council, said in a statement that “these duties are unwarranted, and this determination is completely without merit”.

The province is the the largest Canadian exporter of softwood lumber to the US.

In 2006, Canada and the US signed a Softwood Lumber Agreement. That agreement put to bed a dispute starting in 2001 over lumber between both countries.

That was extended until 2015, and the US government and industry agreed to not undertake any new countervailing or anti-dumping duty investigations against Canadian softwood lumber products for one year – an agreement that expired last October.

No new agreement has been reached in the latest round of talks.

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