Trump says Canada may soon get reciprocal US tariffs on dairy, lumber

By Nandita Bose, David Lawder and Andrea Shalal

WASHINGTON (Reuters) -U.S. President Donald Trump on Friday railed against what he called tremendously high Canadian tariffs on dairy and lumber, and said his administration could soon impose reciprocal tariffs on Canadian products.

"Canada has been ripping us off for years on tariffs for lumber and for dairy products," Trump told reporters in the Oval Office. "They'll be met with the exact same tariffs, unless they drop it, and ... we may do it as early as today or we'll wait 'til Monday or Tuesday."

Trump also mentioned India's high tariff rates, but said India had agreed to lower its import duties.

The comments add to Trump's trade pressure campaign against the Canadian government, which he accuses of failing to stop the flow of fentanyl across the northern U.S. border and of unfairly taking advantage of the U.S. market.

Most of the $1.6 trillion in two-way U.S. trade with Canada and Mexico crosses borders duty free under terms of the U.S.-Mexico-Canada Agreement on trade, which Trump signed in 2020.

Among the few exceptions are Canada's high tariffs on dairy products that are part of its decades-old Supply Management system to protect Canadian dairy farmers. The system also includes import quotas and domestic production constraints to support prices.

The USMCA deal provided limited duty-free quotas for U.S. dairy products, but for anything above these levels, tariffs on specific products can exceed 200%. Washington for years has unsuccessfully challenged the way that Ottawa has allocated the USMCA dairy quotas.

Trump said Canada was charging a tariff of 250% for dairy products and a "tremendously high" tariff on lumber, adding that Canada had been "very difficult" to deal with.

The U.S. already charges combined anti-dumping and anti-subsidy duties of about 14.5% on Canadian softwood lumber imports. Trump last week ordered a new national security probe into global lumber imports, which may add significantly to U.S. lumber tariffs.

On Thursday, Trump suspended tariffs of 25% imposed this week on most goods from Canada and Mexico over the U.S. fentanyl crisis, for 30 days. These would have pushed up the U.S. tariffs on Canadian lumber to nearly 40%, a move that the National Association of Home Builders says could add $7,500 to $10,000 to the cost of an average single-family home.

In a Fox Business Network interview aired earlier on Friday Trump said he had granted the 30-day break for goods compliant with a regional free trade deal to help automakers. But he added that the reprieve was a short-term measure and tariffs could go up over time.

"I thought it would be a fair thing to do, and so I gave them a little bit of a break for this short period of time," Trump said in the interview with Fox News's "Sunday Morning Futures" to air on Sunday.

Trump said that on April 2, reciprocal tariffs would be implemented to equalize any duty rates between the three countries.

"I wanted to help the American carmakers until April 2nd," Trump said. "April 2nd, it becomes all reciprocal. What they charge us, we charge them. It's a big deal."

ADJUSTING TARIFFS

White House trade adviser Peter Navarro told CNBC that under the reciprocal tariff plan, the U.S. will match both tariff rates of other countries and non-tariff barriers.

Navarro said U.S. tariff adjustments would reflect "in the aggregate, the unfairness embedded in the higher tariffs and non-tariff barriers that countries impose on us."

He added that those tariff adjustments would be made through industry-specific and country-specific investigations.

Asked in the Fox Business interview whether businesses could get clarity about his tariff plan, Trump said: "Well, I think so. But, you know, the terms could go up as time goes by, and they may go up and, you know, I don't know if it's predictability."

There are multiple other Trump tariff actions in play.

Next Wednesday, Trump's administration will effectively raise tariffs on steel and aluminum by rescinding longstanding exemptions for duties of 25% on steel and raising the rate to 25% for aluminum. This will heap more duties on imports from Canada and Mexico, the biggest foreign suppliers of the metals.

The move also subjects hundreds of downstream products to those tariffs, from steel wire and fabricated structures to bulldozer blades.

Canada's industry minister, Francois-Philippe Champagne, told CNBC that Ottawa was having difficulty understanding what needed to be done to avoid U.S. tariffs.

"It seems that the goal posts keep moving, and that's what makes it difficult," Champagne said. "So I just think that we need to get back to a place of normalcy in our relationship between Canada and the United States."

(Reporting by Nandita BoseSusan Heavey, additional reporting by Andrea Shalal, Editing by Tomasz Janowski, Deepa Babington and Nia Williams)