During the election campaign, Donald Trump reserved much of his ire towards Mexico not only on immigration, but with NAFTA. Of course, Canada is a signatory as this was originally known as the Canada-U.S Free Trade Agreement.
When Canadian Prime Minister Trudeau visited Trump at the White House in February, Trump gave assurances regarding NAFTA stating, “We have a very outstanding trade relationship with Canada. It’s a much less severe situation than what’s taken place on the southern border.” With regards to any trade imbalances concerning NAFTA, Trump said he only sought to be “tweaking it".
Trudeau has been a frequent visitor to the U.S. and has been friendly with First Daughter Ivanka Trump, even attending the Broadway debut last month of "Come From Away" - the story of Gander, Newfoundland - the little town which welcomed thousands of American travelers as planes made emergency landings in the hours after the attacks of September 11, 2001. All seemed peachy.
But this is Donald Trump we're talking about. Trump has now changed his tune about Canada and is aggressively pursuing America's largest trading partner where it concerns softwood lumber and its supply management system for dairy farmers. The Trump Administration has imposed duties on softwood lumber imports ranging from 3% to 24%. With regard to pricing supports for dairy farmers, Trump has characterized them as a “disgrace” and “another typical one-sided deal against the U.S.”
To be fair to Trump, he isn't the first U.S. President to complain about Canadian softwood lumber or the supply management system and he won't be the last. In the case of the latter, the EU would also like Canada to do away with supply management. The issue very nearly jettisoned the Canada-European Trade Agreement (CETA) which was signed last fall.
With this in mind, Trump has a far stronger case against supply management (which is also used by Canadian egg and poultry farmers) than softwood lumber. While American forests are privately owned, Canadian ones are Crown owned in their respective provinces, particularly B.C. International trade bodies have consistently upheld Canada's right to state ownership of its forests for years and I don't see that changing. There was a softwood lumber agreement in place between Canada and the United States but it expired in October 2015 just as Trudeau's Liberals came to power. For whatever reason, the Trudeau government didn't make negotiating a new agreement a priority during President Obama's last year in office assuming Hillary Clinton would be his successor. Now Trump has brought the splinters.
President Trump is planning to announce proposed changes to NAFTA within the next couple of weeks. It will be interesting to see how Trudeau responds. I suspect Canada-U.S. relations are going to get a whole lot worse.
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