Trump Inches Closer to a Trade War with Canada

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Trump says Canada and Mexico “have taken advantage” of the U.S. during the Clinton-era NAFTA trade agreement, and now they should pay back. The first on the chopping block is Canada, which last month, patted itself on the back for the “good lines of communication” it was able to establish with the Trump administration.

On Monday night, President Trump abruptly closed all lines of communication when he announced a 20% retroactive tariff on Canadian lumber imports. The president plans a similar “tax” on Canadian dairy.

Canada has treated us very unfairly. We have been taken so advantage of,

Trump told the press present in the Roosevelt Room.

Commerce Secretary Wilbur Ross told reporters the duty would be retroactive three months. Ross explained the countervailing tariff is a penalty on Canada for refusing to halt subsidizing its lumber industry. Trump’s tax is designed to offset the government subsidies. The commerce secretary said the measure was “on notice”.

Trump indeed hinted at a looming trade fight with Canada last week. After signing an executive order that instructed a federal agency to conduct an investigation into steel industry’s claims that cheap Chinese imports were killing U.S. businesses, the president called Canadian dairy industry “a disgrace” to U.S. farm owners.

He added that both Canada and Mexico have turned NAFTA into a “disaster” for the U.S. The Trump administration now plans to renegotiate the agreement. Trump said that the new 20% tariff would mean that Americans will be doing lumber in their country.

Trump also announced that the Interior Department and the Environmental Protection Agency are closely working together to push for further deregulation of the U.S. lumber industry. The Commander in Chief promised for the U.S. to do its own lumber and have access to “great amounts” of the material. When asked whether a revived industry would damage the country’s forests, the president replied that logging aging wooded areas would help the forests recover.

Experts expect a similar tax on Canadian milk.