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Canada to Trump: 'We're going to play hard'

The prime minister is said to have "refuted the baseless allegations by the U.S. Department of Commerce and the decision to impose unfair duties", during his conversation with Trump, according to the statement.

In response to the dairy dispute, President Trump has announced the USA will impose a 20 percent tariff on softwood lumber from Canada.

It said Canada would "vigorously defend" the interests of its lumber industry and "would continue to defend its interests" in milk products.

The news follows several days of pointed criticism of Canada by President Trump over Canadian policies supporting the dairy, forestry and energy sectors.

Trudeau also says the friendly nature of the relationship means both sides will be able to work through any disputes that arise, such as those now brewing on softwood lumber and dairy products. "People don't realize Canada's been very rough on the United States".

The U.S. Department of Commerce said this week it would subject Canadian lumber imports to tariffs ranging from three to 24 per cent.

However, about 10 per cent of the company's softwood exports are still shipped to the USA and Murray expects the new duty to make such sales "pretty much unprofitable". Canada's main stock index .GSPTSE notched a two-month high.

"Any two countries are going to have issues that will be irritants to the relationship".

Green Leader Andrew Weaver said the province has awarded too many forest tenure licenses to multinational corporations "that have no interest in keeping value and jobs in B.C." as he pushed his plan to place restrictions on the export of raw logs. He said Canada would help companies and workers affected by the tariffs, noting that trade authorities had consistently sided with Ottawa in the longstanding dispute.

The Canadian American Business Council took umbrage at a comment by US Commerce Secretary Wilbur Ross that NAFTA wasn't "functioning properly", allegedly because Canada was exporting subsidized lumber to the US and was preventing easy access to its market by American dairy farmers.

But the Canadian government has successfully challenged USA claims on softwood lumber under the North American Free Trade Agreement and the World Trade Organization.

Canada's Carr rejected any suggestion that Canada was not playing by the rules.

"The U.S. has a $400 million dairy surplus with Canada so it's not Canada that's the challenge here", Trudeau told Bloomberg. He failed to get his Mexico-funded wall along the southern border, so now he's threatening a trade war with the country to the north.

US milk and Canadian wood are driving the two North American nations toward a potential trade war. "That's why we think this is such a misguided effort", Davies said.

A USA homebuilder group called the ruling "shortsighted".

"That might be separate from softwood lumber, because this issue, we need to negotiate but it should very much inform our approach to NAFTA".

"There is enormous potential", he said by phone from Beijing, citing the large number of Chinese homebuilders and furniture makers who needed lumber.

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