Canada fights back against Trump tariffs

NAFTA explained
NAFTA explained

Canada and the United States aren't getting along on trade.

Canadian officials filed a motion this week that will create a panel of judges to resolve a bitter dispute between Canadian and American lumber companies.

The Trump administration says Canada is cheating by subsidizing softwood lumber so Canadian companies can sell at lower prices than their American competitors. Canadian leaders deny they are helping companies sell at unfairly low prices, which is known as "dumping."

Earlier this month, Trump's commerce secretary, Wilbur Ross, reaffirmed tariffs as high as 18% on Canadian lumber exported to the United States. The tariffs were applied in April.

Related: Mexico is surviving Year 1 of Trump

The latest turn in the lumber fight comes at a particularly tense time.

The United States, Canada and Mexico are renegotiating NAFTA, the trade pact that President Trump has called the worst deal ever. Trump's trade team has proposed erasing the provision in NAFTA that allows countries to convene panels of judges to resolve disputes like the lumber battle.

The next round of NAFTA negotiations begins Friday, and the talks aren't going well.

At the last round, U.S. Trade Representative Robert Lighthizer lambasted his Canadian and Mexican counterparts for what he said was an unwillingness to compromise. Those two sharply criticized Lighthizer's trade proposals at the same press conference.

Trump routinely threatens to withdraw from NAFTA, and Canadian Prime Minister Justin Trudeau acknowledged during a recent visit to Washington that the agreement may not last much longer.

Lumber and NAFTA aren't the only points of contention. Canadian plane manufacturer Bombardier and its American competitor Boeing are in a bitter dispute that has brought in both governments. Ross, the commerce secretary, slapped a 300% tariff on one of Bombardier's jets sold in the United States.

Related: Mexico loses trade battle to Trump

American and Canadian companies have argued about lumber since the 1980s. One point of dispute is that American companies tend to harvest trees on private land but Canadian firms work in forests owned by the Canadian government.

The George W. Bush administration hit Canadian lumber with tariffs in the early 2000s. Canada claimed at the time that they resulted in the loss of 30,000 lumber jobs.

Those tariffs were lifted after the World Trade Organization ruled in Canada's favor, and a temporary pricing agreement was in place until last year. Canadian and American officials couldn't reach a new deal during the Obama administration, and once the pricing agreement expired, American lumber firms filed new complaints with the Trump administration.

--CNNMoney's Jon Ostrower contributed to this report.

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