Trudeau chats with Trump and pledges 'polite' battle to defend Canada

Prime Minister Justin Trudeau and the provincial and territorial premiers agreed to "vigorously defend the interests of the Canadian softwood lumber industry" on Tuesday after the United States imposed duties that will throw Canadians out of work.

The Prime Minister's Office said Trudeau discussed Canada-U.S. trade issues on Tuesday, both with U.S. President Donald Trump and with the premiers, focusing on dairy and softwood lumber. Trudeau and the premiers agreed to continue defending lumber interests, "including through litigation, and agreed that a negotiated settlement is in the best interest of both Canada and the United States."

"They agreed to continue to work together, and acknowledged that while Canadians are polite and fair, we will always strongly defend Canadian interests," the statement said, adding that Natural Resources Minister Jim Carr would reconvene the federal-provincial task force on softwood lumber this week to examine additional measures governments can take to help affected companies, workers, and local communities.

Trudeau's office said that when the prime minister spoke to Trump, both leaders "reaffirmed the importance of the mutually-beneficial Canada-U.S. trade relationship."

Earlier, Carr said there will "inevitably" be job losses because of a new tax. The U.S. Department of Commerce announced late Monday that softwood lumber imports from Canada to the United States, worth an estimated $7.6 billion a year, would be hit with countervailing duties of up to 24 per cent.

But Trudeau's office said the prime minister told Trump that the U.S. imposed "unfair duties" due to "baseless allegations" and that Canada would defend its industry as it had successfully done in past disputes with the Americans.

The news follows several days of pointed criticism of Canada by President Trump over Canadian policies supporting the dairy, forestry and energy sectors. And on Tuesday, Trump renewed his attacks by singling out Canada again.

"Canada has made business for our dairy farmers in Wisconsin and other border states very difficult," he said in a message posted Tuesday morning. "We will not stand for this. Watch!"

On the issue of dairy, Trudeau's office said that the prime minister also defended Canada's position that it is upholding its international trade obligations. Both leaders agreed to continue discussing the issues, the prime minister's office added.

Softwood lumber dispute is decades old

The border tax is the latest move in the Canada-U.S. softwood lumber dispute that has plagued the two countries for decades. The Canadian government says it's the fifth time the two sides have locked horns over the issue in the last 30 years.

“Our government disagrees strongly with this decision,” Carr said at a press conference in Ottawa Tuesday.

“It is unfounded, and we will vigorously fight for the interests of the Canadian softwood lumber industry, its workers, and their communities.”

Carr said the government has a suite of programs and services available to Canadians to deal with the fallout from the tax, including employment insurance, career counselling, retraining and skills development.

“If we look at the history of these trade actions, there inevitably will be job losses, and we will focus our efforts on doing whatever we can to ease the impact of those job losses,” said Carr.

“That is the reality of this countervail, and it is going to result in some tough times for some operators across the country.”

Lumber such as siding, flooring, and other home building materials is subject to the duties. Cash deposits based on the new rates will be collected at the border.

Canada, U.S. get set for round five

A countervailing duty, like the one placed on softwood lumber imports from Canada, is a tax meant to protect the importing country's industries from being harmed by products being subsidized in the exporting country.

It's a way to level the playing field--that is, if both sides can even agree that the playing field is uneven in the first place.

The U.S. lumber industry alleges that the price that Canadian firms pay for the right to harvest timber from Crown lands are essentially subsidized. "This is not our idea of a properly functioning free trade agreement," declared U.S. Secretary of Commerce Wilbur Ross.

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

Susan Yurkovich, president of the BC Lumber Trade Council, said the move was driven by a "protectionist lumber lobby" in the United States that aims to create "artificial supply constraints" in order to drive up prices.

The Forest Products Association of Canada, which represents the industry, estimates it is worth $65 billion to the economy and employs 230,000 direct jobs in Canada. It said U.S. demand for lumber exceeds what the domestic industry can provide.

"They need Canada's softwood lumber," the Association stated in a press release.

Carr said the cost will be passed on to U.S. families who want to build homes or renovate them, and “negatively affect people’s jobs on both sides of the border.”

Canada and the U.S. last reached a deal on softwood lumber in 2006, but that deal expired in October 2015. Officials expect Canada not to challenge the latest ruling until the final determinations are released in the fall.

Five companies singled out

The softwood lumber imports will be taxed differently depending on which company is importing. Most lumber companies are being hit with a 19.88 per cent duty on imports.

Five Canadian firms are being specifically targeted by the U.S. Commerce department for specialized duties. Two of those, West Fraser Mills and Canfor Corporation, are getting hit with larger duties than the main rate, while the three others get smaller rates.

The five firms, their rates and their headquarters are:

• West Fraser, 24.12 percent (Vancouver, B.C.)
• Canfor: 20.26 percent (Vancouver, B.C.)
• Tolko: 19.50 percent (Vernon, B.C.)
• Resolute Forest Products: 12.82 percent (Montreal, Q.C.)
• J.D. Irving: 3.02 percent (Saint John, N.B.)

The Trump administration also said that J.D. Irving Ltd., and other companies in the “all others” rate will be subject to “retroactive” measures stretching back 90 days.

NDP blasts Trudeau government for 'failure'

The New Democratic Party blasted the Trudeau government, saying their "failure" to stop a softwood lumber tax "jeopardizes Canadian jobs." The party said around 400 sawmills closed in Canada during the last dispute, along with 20,00 jobs.

“Now that President Trump has imposed tariffs, Canadians want to know how the Liberal government will respond. Another round in court is not a solution,” said NDP trade critic Tracey Ramsey in a press release.

“It’s about time Justin Trudeau stood up to Donald Trump and stood up for softwood lumber jobs.”

Meanwhile the United Steelworkers union called for the federal and provincial governments to slap an "equivalent tax" on unprocessed logs exported to the U.S..

"The remarkable high export tariffs announced by the Trump administration are unfairly targeting Canadian workers and will put hundreds of Canadians out of work," said USW international president Leo W. Gerard.

Editor's note: This article was updated at 8:30 p.m. PT with details of Trudeau's conversation with Trump and a new headline.