US commerce secretary defends Trump's trade war with Canada

US Commerce Secretary Wilbur Ross has defended a decision by the US administration to impose new tariffs on Canadian softwood lumber imports.

"They are a close ally, they are an important ally, generally a good neighbor. That doesn't mean they don't have to play by the rules," Ross said on Tuesday during a White House daily press briefing.

The decision comes after a dairy dispute between the two countries last week when Canada pledged to support domestic dairy farmers who can sell their ingredients to Canadian cheese makers and yogurt producers for less than equivalent imports.

"Things like this I don't regard as being a good neighbor, dumping lumber. And there's a feeling in the dairy industry that they are a little bit abrupt in the action they took the week before," Ross noted.

Early on Tuesday, the White House announced that it has increased the tariffs on Canadian softwood imports to 20 percent after US President Donald Trump launched a trade war on the country's second-largest trading partner in a tweet, saying that “Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!”

The dispute between the US and Canada over softwood lumber, which goes back to the 1980s, originally stems from a difference in forestry ownership. The US lumber mills contend that Canada is subsidizing softwood lumber exports and this allows the country to dump softwood lumber, which is largely used to build homes in the US. Canada's southern neighbor, which imported $5.7 billion worth of Canadian softwood lumber last year, is the main customer of the product.

Ross, however, also assured reporters that this decision would not affect the home prices in the US, adding that there are a lot of other more important factors in the discussion.

He further reiterated that the lumber dispute with Canada highlights the necessity of renegotiating the North American Free Trade Agreement (NAFTA).

"If NAFTA was functioning properly, you wouldn't be having these kinds of very prickly, very unfortunate developments back to back," he said. "NAFTA has not worked as well as it should."

Since coming to power, Trump has repeatedly said that he is sticking with his campaign promise to take on NAFTA although he has flipflopped many other campaign pledges.

The Manhattan billionaire has called NAFTA “the worst trade deal ever agreed to, signed, in the history of the world,” arguing that it has led to the outsourcing of thousands of jobs from the United States.

Canada has signaled that it is open to renegotiation, with Prime Minister Justin Trudeau vowing to work closely with the new US president on the trade deal.

Following the Tuesday's announcement, the Canadian dollar fell to a 14-month low of 73.55 versus the US dollar.

“The government of Canada disagrees strongly with the US Department of Commerce’s decision to impose an unfair and punitive duty,” Chrystia Freeland, the minister of foreign affairs, and Jim Carr, the minister of natural resources, said in a joint statement. “The accusations are baseless and unfounded.”

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