In reaction to a sudden major tariff on Canadian lumber exports into the United States, the Canadian dollar fell today to its lowest point against the US dollar since February 2016.
The loonie hit a low of 73.60 US cents following the announcement of a policy that has been deemed unfair and unprovoked.
Yesterday, US President Donald Trump announced tariffs of up to 24% on Canadian softwood lumber companies that export to the US market. His government has brought back old arguments from previous unsuccessful softwood lumber disputes that the Canadian market is subsidized.
The confrontational move comes ahead of the planned renegotiation on NAFTA, setting the tone that the US will pursue Canada and Mexico with its trade deals. Until recently, Trump’s attacks on trade and economy were focused on Mexico and China, and there were few indications that he would heavily target Canada with his protectionist stance.
“Despite there being no actual evidence of unfair trade practices, the U.S. is taking a ‘presumed guilty until proven innocent’ approach with the rest of our industry,” said BC Premier Christy Clark. “It is important to remember that in every softwood dispute, the U.S. allegations of subsidy have been proven false. We believe that will be the case in this round as well.”
“Team Canada is strong and we will stand united in the face of this baseless U.S. trade action. Prime Minister Trudeau and the federal government have been extremely responsive, putting softwood at the top of their agenda. We will continue to work side by side with them to make sure the needed supports are in place for displaced workers in the event of job impacts, and to accelerate the diversification of our forest products and markets.”
Earlier today, Trump also issued threats against the Canadian dairy industry for allegedly undercutting American farmers, which likely also had an impact on the loonie. It remains to be seen whether similar tariffs will be enacted on the dairy industry as well.
Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!
— Donald J. Trump (@realDonaldTrump) April 25, 2017