Signs of trade war between the US and Canada

Washington/Toronto : The US President, who has been giving indications of trade actions against nations such as China, Germany and Mexico, has targeted neighbouring country Canada itself. The US, who has been criticising Canada over the export of ‘Dairy’ products and wood, has announced 20% tax on products imported from Cananda. While these actions by the US has attracted strong reactions in Canada, the Prime Minister of Canada, Justine Trudeau has warned that the government of Canada will take steps to protect their interests. Hence it is evident that an intense trade war may soon ignite within the two nations.

NAFTA’, a free trade Agreement amongst the US, Canada and Mexico, is in existence since past few decades. However, President Donald Trump, while criticising this agreement to be a ‘Trade Disaster’, has given indications to reconsider the same. While Mexico and Canada have become restless due to this stand of the US President, the Trump administration has started to give indications of implementing even more aggressive policies.

Since many decades, arguments are ongoing between the US and Canada over wood trade. Every year, wood worth nearly 15 billion dollars is used in the US for the construction of houses. More than 31% of this, i.e. around 5.5 billion dollars worth of wood is imported from Canada. The US has claimed that the price of wood exported to the US reduces nearly by 20 to 25% due to the subsidy and discounts provided by the government of Canada to wood traders.

While accusing the policy, related to the trade of wood with Canada, to be inappropriate, the US has decided to take action in the form of fines. President Trump gave information in this regard, in a meeting. ‘The tax on import is levied in order to make it possible for the US traders to compete with the neighbouring nation’, said Trump. At the same time, Trump also criticised the restrictions imposed by Canada on the ‘Dairy’ sector companies of the US.

‘Canada has made it very difficult for the dairy producers in Wisconsin and other regions in US, to do business. We will not tolerate this’, warned the US President. It is seen that Canada has imposed a whopping 270% import tax on the dairy products imported in their country. This has impacted the US dairy producers in a big way.

The US Secretary for Commerce, Wilbur Ross accused Canada of violating the legal framework and supported the tax imposed on the import of wood. He also claimed that the US will gain nearly 1 billion dollars from this tax. At the same time, he confessed that the trade relations between the US and Canada are disturbed lately.

Canada also has taken an aggressive stand over the actions carried out by the Trump administration in the US. The Canadian Prime Minister Justin Trudeau warned that the tensions over the border of the two nations would aggravate due to the decision of tax imposition. At the same time, he has also warned that Canada will take remedial actions to safeguard its interests.

Following Canada, Mexico as well, has taken an aggressive stand against the US over trade related issues and the World Trade Organisation has permitted Mexico to impose a fine on the US in the ‘Tuna Fish’ dispute. Mexico is going to impose a fine of nearly 160 million dollars on the US, informed sources.

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