Canada announced Thursday US$867 million (US$641 million) in loans and guarantees to lumber producers as they deal with the impact of U.S. tariffs on Canadian softwood exports.
The government package announced is meant to help forestry companies explore new markets and innovate.
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Natural Resource Minister Jim Carr acknowledged the measures risk raising the ire of American officials but he said the loans are at market rates.
U.S. Commerce Secretary Wilbur Ross announced in April duties ranging from 3 percent to 24 percent on softwood lumber imports with an average of about 20 percent. Ross argued that Canada unfairly subsidizes its industry.
Canadian Foreign Minister Chrystia Freeland said it is unfair and punitive but said Canada is eager to reach a settlement. "We have been here before," Freeland said.
The two countries have previously patched over their differences on lumber imports, most recently with a compromise that expired in 2015. It has long been a major trade irritant that has roiled relations between the United States and Canada for more than three decades. The tariffs come amid increasing trade tensions between the two countries.
Softwood lumber, which includes pine and other varieties, is heavily used in the construction of new homes.
Carr called the aid an appropriate response that will withstand scrutiny but the U.S. Lumber Coalition, an alliance of American producers, disagreed.
"Today's announcement of a new government subsidy for Canadian softwood lumber producers only further tilts the trade scale in Canada's favor, threatening more than 350,000 jobs in communities across the United States," U.S. Lumber Coalition spokesman Zoltan van Heyningen said in a statement. "The U.S. Commerce Department's recent anti-subsidy duties were a step in the right direction, and we appreciate the Administration's support. But Canada continues to push back and refuses to play by the same set of rules."