The United States and Canada have the world’s largest trading relationship.
President Donald Trump met with Canadian Prime Minister Justin Trudeau for the first time on Monday.
“We have a very good trading relationship with Canada,” Trump said at a news conference.
But the longstanding trade relationship between the United States and Canada has not been as smooth as you might think. There have been trade wars, reprisals, dumping allegations, and job losses.
Stuart Trew, editor of the Canadian Center for Policy Alternatives, a research group in Canada’s capital, Ottawa, said, “Our trade ties are clearly strong … but despite the agreements we have made, The relationship was unstable.
Trump has frequently criticized Mexico and NAFTA, the trade deal between the United States, Mexico and Canada. But Canada is rarely mentioned.
However, more NAFTA disputes are filed against Canada than against Mexico, almost all by US companies. Even today, Canada imposes tough tariffs on the United States, and the two countries have only recently settled a bitter dispute over meat.
Most leaders and experts stress that trade ties between the two countries are strong and mostly positive. But Canada and America have had many battles along the way.
Now Trump wants to renegotiate NAFTA, which will be at the top of the agenda for his talks with Trudeau.
1. Canada gets into more NAFTA troubles than Mexico
Listening to Trump, you might think Mexico is a NAFTA villain. But since her launch of NAFTA in 1994, he has received 39 complaints against Canada, most of them by US companies. Known in the industry as Investor State Dispute Resolution, it allows companies to resolve cases before a special panel of NAFTA judges rather than in the district courts of Mexico, Canada, or the United States.
There are only 23 complaints against Mexico. (By comparison, companies in Mexico and Canada have filed a total of 21 complaints against the United States.)
And increasingly, Canada is the target of US complaints.Since 2005, Canada has been hit by 70% of NAFTA dispute claims, according to Canadian research firm CCPA.
2. U.S.-Canada timber war
NAFTA is not the only problem area. In 2002, the United States imposed a tariff of approximately 30% on Canadian timber, claiming that Canada was “dumping” the timber on the US market. Canada dismissed the claim, claiming the tariffs had taken 30,000 jobs from her at the lumber company.
“It’s been a very bad point in Canadian-American relations for quite some time,” says Tom Berg, an economics professor at McGill University in Montreal.
The controversy began in the 1980s, when an American lumber company said Canadian lumber companies were not doing it justice.
Whether Canada actually broke the rules is a matter of debate.
Canadian officials deny that the government subsidizes Canadian softwood lumber companies. U.S. lumber companies still claim to do so, and a U.S. Department of Commerce report found that Canada provided subsidies to lumber companies in 2004.
The Canadian government allegedly subsidized timber companies because it owned many of the timber producing areas. In addition to Canada’s vast timber supply, this subsidy allowed Canada to price timber at a price lower than what U.S. companies could charge.
The World Trade Organization eventually sided with Canada, denying the US allegations, and the two countries agreed to end tariffs in 2006.
But that agreement and the subsequent grace period expired in October, and the two sides are back in agreement again. The Obama and Trudeau administrations were unable to reach a compromise before Obama stepped down, and it remains a controversial trade issue, with US lumber companies calling for tariffs again.
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3. Smoot Hawley sparks US-Canada trade war
Things got even worse during the Great Depression. In 1930, Congress wanted to protect American jobs from world trade. Therefore, the United States imposed tariffs on all countries that shipped goods to the United States to protect workers.
It was called the Smoot-Hawley Act. Today, it is widely accepted that this law made the Great Depression worse than it had been.
Canada was furious and retaliated against the United States more than any other country, sparking a trade war.
Professor at Dartmouth College, “Peddling Protectionism: Smoot-Hawley and the Great Depression.
For example, the United States increased tariffs on eggs from 8 cents to 10 cents (these are 1930s prices). Canada also retaliated by raising tariffs from 3 cents to 10 cents.
Exports declined sharply. In 1929, the United States exported nearly 920,000 of her eggs to Canada. After three years, only about 14,000 eggs were shipped, according to Irwin.
RELATED: Remember Smoot-Hawley: America’s Last Major Trade War
4. Canada’s very high tariffs on US eggs, chicken and milk
Fast forward to today. Smoot-Hawley is long gone, but Canada continues to impose high tariffs on egg, chicken and milk imports from the United States.
For example, some tariffs on eggs are as high as 238% per dozen. according to to the Canadian Department of Agriculture. Some milk imports are as high as 292%, depending on the fat content.
“They can’t tell you that because they’re so annoying. We don’t have American eggs in Quebec,” Berg says.
According to the Canadian Embassy in the United States, the reality is very different. The official says Canada is one of America’s largest export markets for milk, poultry and eggs, despite some tough tariffs.
The US imposes tariffs on some goods from all countries, but not as high as Canada.
Experts say these tariffs continue to plague some U.S. dairy and poultry farmers, some of whom are challenging sales to the Canadian market. But with tariffs being introduced for decades, we don’t expect much to change.
RELATED: Trump likes to talk about Reagan tariffs
5. Coolerhead and the Future of NAFTA
Despite all these controversies, experts stress that this trade relationship is still one of the best in the world.
In fact, the two countries are so interconnected now that when a trade dispute erupts, US companies sometimes side with Canadian companies and oppose US lawmakers.
For example, Canadian meat producers have challenged US laws requiring that cattle be labeled where they were born, raised and slaughtered. The Canadian said the law discriminated against selling the meat in the United States, and he took the matter to the WTO.
The WTO supported Canada, and last December, Congress repealed the country of origin labeling law. US meat producers whose business is intertwined with Canada actually sided with their Canadian counterparts, arguing that the regulation was too burdensome.
Regarding Trump’s proposal to dismantle NAFTA, many US and Canadian experts say it is not worth renegotiating or ending the deal. The three countries that are part of the deal are so entwined with each other that unraveling all that integration would have a negative impact on trade and economic growth.
— Editor’s Note: This article was originally published on August 11, 2016. Then I updated.
CNNMoney (New York) First published February 13, 2017: 11:11 AM ET
