Trump Administration Taking the Ax to NAFTA With Lumber Tax?

As the Trump administration hits Canada with a 20% tax on imports of softwood lumber, U.S. Commerce Secretary Wilbur Ross indicated Tuesday the move was meant to prime the pump for a renegotiation of the North American Free Trade Agreement (NAFTA).

"NAFTA has not worked as well as it should," Ross said, adding the administration has put “Congress on notice” that it intends to renegotiate the deal.

As President Trump and his cabinet hammer down on trade imbalances including “dumping” of materials such as steel, lumber and aluminum—the latter is expected to be addressed Thursday according to Ross—they appear to be weakening the trade agreements they have in place until they have the complete authority to move ahead with a full renegotiation.

Ross said the effort to broker a new deal with Canada and Mexico has been “stalled” until Congress grants the president trade promotion authority (TPA). TPA is a fast-track process to allow “an up or down vote” with no amendments on proposed legislation.

While hosting Canadian Prime Minister Justin Trudeau at the White House in February, the president said he wanted to “tweak” NAFTA mainly due to the trade imbalance with Mexico, not Canada.

“We have a very outstanding trade relationship with Canada. We’ll be tweaking it. We’ll be doing certain things that are going to benefit both of our countries. It’s a much less severe situation than what’s taking place on the southern border,” Trump said during the press conference with Trudeau.

Ross said he did not believe this new tariff on Canadian lumber would impact the relationship between President Trump and Prime Minister Trudeau.

On Tuesday morning Trump also tweeted about Canada’s dairy supply-management policies and their impact on U.S. producers.

While the U.S. flexes it muscles in the world economy, Ross insisted he did not expect a trade war to break out between the two countries.

“I don’t know what it is that they could do that would be a legitimate action [in retaliation],” he said.