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

US puts 20% duty on BC lumber exports, retroactive for 90 days

President Trump promising action on US-Canada dairy dispute

He also noted Natural Resources Minister Jim Carr's response to the tariff: "The Government of Canada disagrees strongly with the U.S. Department of Commerce's decision to impose an unfair and punitive duty".

The White House has insisted a phone call between Donald Trump and Justin Trudeau was "amicable", just hours after the US President attacked his neighbour over trade. President Trump has blamed NAFTA.

International Trade Minister Francois-Philippe Champagne visited Beijing on Tuesday, saying his visit could open new markets for Canadian wood.

That, combined with exchange rate differences, made it challenging for USA producers to compete, he said. "My answer to that is we are looking at all sorts of options to obviously support our industry".

Canada's foreign minister on Tuesday said her nation would fight tariffs from President Trump's administration that it finds unfair.

Prime Minister Justin Trudeau has warned Canada and the USA could suffer a "thickening" border as the Trump administration imposes new tariffs on softwood timber and trade tensions between the two countries escalate.

The United States and Canada typically have friendly trade relationships but that has soured recently.

The decision by the Trump administration came after failed talks to cut Canadian tariffs on U.S. dairy products, which are 270 percent.

Trump's team chose to hit Canada with tariffs after talks failed to make it easier for U.S. dairy farmers to sell into Canada.

Earlier this week, the Trump Administration sparked controversy when the President announced a new import tax on Canadian soft timber. "It may be enough to stem the bleeding but we do remain hopeful that the United States and Canada can negotiate another softwood lumber agreement".

The United States, Canada, and Mexico are expected to start renegotiating the North American Free Trade Agreement (NAFTA), which was signed in 1992 and defines trade between the countries. Last year, the US consumed 47 billion board feet of lumber and produced 32 billion.

Up to now, Trump's harshest criticisms of NAFTA have focused on Mexico, but in the past few days the president has shifted his sights to accuse Canada of harming USA farmers and milk producers.

He added that his government would "vigorously" defend their economic interests, including milk exports after Trump reportedly threatened to target Canada's dairy next.

Eric Miller, a former Canadian diplomat who is now a Washington-based trade consultant with the Rideau Potomac Strategy Group, said trade friction with Canada should be thought of "as the violin Trump gets to play and set the mood of the place".

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