Former US ambassadors blast Trump over Canada

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U.S. Commerce Secretary Wilbur Ross amplified Trump's remarks in a statement afterward that also referenced a fight over a new Canadian milk policy that U.S. producers say violates NAFTA.

During a White House news conference, Ross alleged that Canadian provinces subsidise lumber, which is used in housing construction in America.

The provincial government says forestry communities need support after the US slapped duties of up to 24 per cent on softwood lumber entering the USA from Canada. The announcement Monday is likely to lead to lawsuits and a standoff between the United States and Canada, which could lead to a broader trade war, CNN reported Tuesday.

Trudeau's office's readout of the call included several details of the conversation.

"The two leaders discussed the dairy trade in Wisconsin, New York State, and various other places".

His administration also moved to impose a hefty tariff on softwood lumber from the US' neighbour, accusing the Canadians of unfairly subsidising prices as part of a trade dispute dating back to the 1980s.

U.S. lumber firms have made allegations that Canada subsidizes the industry for decades, leading to at 30 percent tariff in 2002 and that subsequent loss by the United States before the World Trade Organization in 2004. "That's stopping and its stopping fast".

It said Mr Trudeau confirmed that Canada would uphold the North American Free Trade Agreement (Nafta), which gives the USA duty-free access for milk protein substances, but that his country would "continue to defend its interests". "So when we're the country with the deficits, we have no fear", Trump said in response to a question.

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Resolute, the Canadian lumber firm, denied it is subsidized.

The tensions, which follow comments by Trump about Canada's "unfair" dairy system, sent the Canadian dollar to a 14-month low as investors braced for tense negotiations with Canada's largest market.

"Independent trade panels have repeatedly found these (U.S. lumber) claims to be baseless".

The prime minister and the president reaffirmed the importance of the mutually beneficial Canada-US trade relationship.

The two countries and Mexico are preparing to renegotiate the 23-year-old NAFTA.

Canadian Trade Minister Francois-Philippe Champagne, in China to boost sales of softwood lumber, said there had never been a better time to diversify exports.

Anyone looking for a political decoder for how the Trudeau government might be interpreting Donald Trump's latest spate of anti-Canadian trade rhetoric could do worse than American comedian Stephen Colbert.

Which of these sectors should Ottawa defend most viogorously in trade talks with the USA?