Canada braces for 'tough times' in USA lumber dispute

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Trade Minister Francois-Philippe Champagne says selling more Canadian softwood lumber to China is one answer to the latest trade dispute with the U.S.

"It reflects what is going to happen with the trade relationships for the US and its neighbor", said Sireen Harajli, FX strategist at Mizuho in NY. The U.S. action is unwarranted and uses the arguments previously rejected by panels convened by North America Free Trade Agreement panels, West Fraser Timber Co.

The United States has decried Canadian subsidies on lumber since the 1980s, and a 30 percent US tariff at the time cost 30,000 jobs in Canada, the timber companies said. "Watch!" Trump said in a tweet Tuesday morning.

Nelson says more than half of all Canadian lumber exports to the US are from British Columbia.

Canadian exports of softwood lumber to the United States were valued at $5.6 billion a year ago, according to the Commerce Department.

Canada has said it will fight the tariffs which is an "unfair and punitive duty" imposed on "baseless and unfounded" allegations, according to a joint statement from Foreign Minister Chrystia Freeland and Natural Resources Minister Jim Carr.

In an interview with The Wall Street Journal, US Commerce Secretary Wilbur Ross said that Canada had been notified about Trump's decision and that the tariff will be applied retroactively. The group includes the Washington-based U.S. Lumber Coalition lobby group, a carpenters union and about a dozen American timber producers and sawmills.

The president tweeted Tuesday: "Canada has made business for our dairy farmers in Wisconsin and other border states very hard".

On the dairy side, Canada has long imposed sky high tariffs on USA dairy products to protect Canadian farmers.

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If those deals go through, that means 20 to 25 of the 58 farms dropped by Grassland Dairy will still need to find other buyers by Monday. One person in the room said Trump threatened that dairy could be next.

The softwood lumber dispute between Washington and Ottawa has also seen many twists and turns for almost 35 years, with USA producers accusing their Canadian counterparts of exporting lumber at subsidized prices, harming American businesses.

Officials in Canada, the second most important U.S. trading partner, rejected claims of subsidies.

Though the negotiations are happening federally, Clark herself said B.C.

Dairy farmers in Canada have recently cut their prices, undercutting dairy farmers in the US who are already feeling the effects, with some farmers going out of business.

"This is not our idea of a properly functioning Free Trade Agreement", Ross said. And they say that's unfair.

Washington's decision to slap Canada's lumber sector with new duties will hurt the Alberta industry, but the softwood spat is far from over.

And, because about a third of the lumber used for building homes in the US comes from Canada, those price increases will be passed along to customers.

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

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