Canada-US relationship bigger, more important than any one 'irritant,' says PM

On lumber, USA companies claim that their Canadian competitors have an unfair advantage: government subsidies. The last lumber deal between the two countries was reached in 2006 and expired in October of 2015. The move comes ahead of expected talks to renegotiate the 1994 North American Free Trade Agreement. Trump has called the move "a disgrace" that's hurting US producers in dairy states like Wisconsin. We will not stand for this.

"How I read this is markets were discounting a very benign scenario, and this is a wake-up call" said Andres Jaime, global foreign exchange and rates strategist at Barclays, adding the peso was being hit by the news about Canada.

Moreover, Canada's leadership pledged to stand by the country's softwood lumber industry and protect its interests under existing worldwide trade regulations.

"The Government of Canada disagrees strongly with the US Department of Commerce's decision to impose an unfair and punitive duty".

Council president Susan Yurkovich said softwood disputes between Canada and the US span three decades and Canada has always won in the courts.

Canadian Natural Resources Minister Jim Carr and Foreign Minister Chrystia Freeland on April 24 called the USA accusations "baseless and unfounded" and would raise US home construction costs, according to a joint statement.

The Canadian dollar dropped to a four-month low against the U.S. dollar after Trump announced the tariff, falling as much as 0.6% to US73.6c. It set a preliminary subsidy rate of 19.88% for all other producers in Canada. "We have prevailed in the past and we will do so again".

They need to wait until the final determinations, which likely won't happen until late 2017, officials say, which means a legal challenge wouldn't come before January 2018. This decision is expected in June.

"It has been a bad week for U.S". Carr said that tariffs on Canadian wood will jack up the price of new homes and jeopardize thousands of homebuilding jobs. But it would also take on the politically powerful Canadian dairy industry, which will fight viciously to hold on to its monopoly. The allegations are the same made in previous softwood trade battles which were rejected and overturned by independent Nafta panels, she said. The industry group represents companies such as Canfor, West Fraser and Interfor.

Ross said in an interview Tuesday on CNBC's "Squawk Box" that the new lumber tariff is the result of a long-running dispute and not the beginning of a trade war. This has contributed to a more than 20% surge in wood prices since the U.S. election.

Since the early 1980s, the United States has argued with Canada over how much softwood lumber the country's suppliers can sell in the U.S. and at what price. "The lumber in Quebec and Ontario is not subsidized".

That could change when Canada, Mexico and the US begin renegotiating NAFTA, a trade deal under pressure in the Trump era.

NAHB is urging the US and Canada to work together to achieve a long-term solution that provides for a consistent policy on the price of lumber. Trump has called the move "a disgrace" that hurts US producers in dairy states like Wisconsin.

"I would not use the word surprise to characterize reactions to politics in the United States right now", Carr said. It was also found that at just a 15 percent tariff, 4,600 American jobs and $265 million in wages and salaries would be lost. Ross explained that certain Canadian provinces are disadvantaging USA -based lumber producers by allowing local loggers to cut down trees at reduced rates and sell them at lower prices, and that negotiations to rectify this were unsuccessful.

COALITION Legal Chair Cameron Krauss said the ruling "confirms that Canadian lumber mills are subsidized by their Government and benefit from timber pricing policies and other subsidies which harm USA manufacturers and workers".

Trump over the past week or so has stepped up his criticism of Canada's trade policies.