Why Canada has a huge trade deficit

Trade dispute between the USA and Canada is rocking up

Canada is the USA's second largest trading partner. President Donald Trump does not contest that, he continues to rely on confrontation in the trade disputes with the neighbor. Canadian Prime Minister Justin Trudeau is not intimidated. He threatened a tough reaction to punitive tariffs on Canadian timber imposed by the US Treasury Department on Monday.

Trudeau said in a television interview: "I am polite, but I am also very determined when it comes to defending Canada's interests." The accusation that timber exports are subsidized in an illegal form is "irrelevant and unfounded". Foreign Minister Chrystia Freeland announced that Canada will defend the interests of its softwood industry through legal channels.

Trump: Canada is "very rough" with us

The US President reacted in his wording and manner in a way that the public has come to expect from him: Canada was "very rough" with the USA in trade matters, criticized Trump. That is the reason for the "very high" duty on the woods. When asked whether he was afraid of a "trade war" with Canada, Trump answered journalists with a resounding no.

The USA had rekindled the decades-old dispute over Canadian imports of coniferous wood with the announcement of a penalty tariff of 20 percent on softwood imports. US Secretary of Commerce Wilbur Ross accused the northern neighbor of violating trade agreements. It concerns the allegation of illegal subsidies by the government in Ottawa for the Canadian timber industry. According to the Washington Department of Commerce, the United States imported softwood from Canada worth $ 5.6 billion last year.

Also on Trump's negative list: Canadian milk

There is also a dispute over the trade in dairy products. Trump accused Canada on Twitter of having made the dairy farmers' business in the US very difficult. "We won't let that sit on us." The US dairy industry had accused Canada of bringing more and more cheap milk to the US as part of a new pricing policy. In addition, Canada on the other hand is blocking the import of US milk. This creates significant economic difficulties for dairy farmers in the United States. The replica from Canada came immediately and sounds exactly like the wood dispute: The allegations were unfounded.

Enemy Nafta

The background to the trade disputes is also the North American trade agreement NAFTA, in which the USA, Canada and Mexico have been amalgamated since 1994. The US president sees his country blatantly disadvantaged by the agreement, which is why it should be renegotiated at his insistence. Nafta was a "disaster", Trump had recently criticized again. American jobs are at the expense. Last year the US trade deficit with Canada was more than $ 11 billion.

Canada and Mexico are not the only trading partners targeted by the US. In view of their huge trade deficit, the Americans also accuse important economic partners such as China and Germany of unfair trade practices. Just last weekend, US Treasury Secretary Steven Mnuchin reiterated the US government's criticism of open world trade at the IMF spring meeting in Washington.

qu / wa (dpa, afp)