Basically, Canadian dairy farmers were upset that ultra-filtered milk from the USA, used to make cheese and other products, was being imported to Canada in the same category as milk powder, which has low tariffs.
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.
"The U.S. has a $400 million dairy surplus with Canada so it's not Canada that's the challenge here", Trudeau said Thursday, and added other countries subsidize their agriculture industries. "That doesn't mean they don't have to play by the rules".
He went on to claim "virtually every country" has a trade surplus with the United States. The housing market crash in 2008 cut demand for softwood lumber products such as pine 2x4 studs and other kinds of boards used to build homes, which are among the products affected by the administration's move.
Trump last week also said Canadian energy was another example of a bad trade deal for the United States, but gave no specifics or evidence. A report in the Toronto Star on Monday evening said Canada did not immediately plan to retaliate.
Harry Nelson, a professor of forestry at the University of British Columbia, said the largest forestry companies, especially in British Columbia, can withstand a long dispute with several years of US -imposed import tariffs on softwood. In a preliminary determination, the Department said that countervailing duty rates will be imposed on the following major Canadian exporters: Cantor (20.26 percent), JD Irving (3.02 percent), Resolute (12.82 percent), Tolko (19.5 percent), and West Fraser (24.12 percent).
However, US lumber companies are satisfied with the decision, following Trump's pledge to put America first. If confirmed, the tariffs would then have to be approved by the US International Trade Commission. The Commerce Department is also considering anti-dumping duties, a tariff on imports determined to be priced below fair market value.
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Jim Carr, Natural Resources Minister, said the federal government "strongly disagrees" with the decision to impose "an unfair and punitive duty" on Canadian lumber.
"Any two countries are going to have issues that will be irritants to the relationship and, quite frankly, having a good constructive working relationship allows us to work through those irritants".
According to the U.S. Commerce Department, imports of softwood lumber from Canada were valued at an estimated $5.66 billion in 2016.
Producers north of the border reacted furiously to the ruling.
"Do you fear a trade war with Canada?" a reporter asked.
"The allegations made by the USA lumber lobby are the same arguments they made in prior rounds of litigation, all of which were rejected and overturned by independent NAFTA panels", she said, denouncing a "protectionist" attempt to "create artificial supply constraints on lumber and drive prices up".