The meeting could not have been more cordial when Donald Trump hosted Justin Trudeau at the White House in February.
Mr Trump was on his best behaviour and Mr Trudeau oozed charm. The greatest excitement was generated by the Canadian prime minister successfully fending off the US president’s distinctive grab and yank handshake technique with what was hailed as an “alpha shoulder grab”.
The vignette was seen, at least by self-appointed experts on social media, as Mr Trudeau asserting that Canada was not going to be pushed around by its powerful neighbour.
Mr Trump had railed in his election campaign against the North American Free Trade Agreement (Nafta), which he said had put Americans out of work. But his target had been Mexico, rather than Canada, and this was the theme he stuck to when the two men met.
“We have a very outstanding trade relationship with Canada. We will be tweaking it. We will be doing certain things which benefit both of our countries,” the US president said.
“It is a much less severe situation than what’s taken place on the southern border. For many, many years the transaction was not fair to the United States.”
Mr Trudeau stuck to the script, too. “Canadians are rightly aware that much of our economy depends on a good working relationship with the United States, a good integration with the American economy,” he said.
If a week is a long time in politics, two months is an eternity. At one point it looked as if the US was going to pull out of Nafta completely before the White House backed off. Mr Trump called Mr Trudeau and Enrique Peña Nieto, the Mexican president, to reassure them the US would honour the 23-year-old pact.
Tensions have been simmering between Washington and Ottawa for some time. The US claims Canada is illegally subsidising its timber industry and American dairy farmers have accused their counterparts north of the border of predatory pricing.
The ill feeling erupted into a full-scale trade war last Monday when Wilbur Ross, the US commerce secretary, announced Washington was imposing a tariff on Canadian lumber.
“It has been a bad week for US-Canada trade relations. Last Monday, it became apparent that Canada intends to effectively cut off the last dairy products being exported from the United States. Today, the Department of Commerce determined a need to impose countervailing duties of roughly $1bn on Canadian softwood lumber exports to us. This is not our idea of a properly functioning free trade agreement.”
The Canadian government did not hold back. Jim Carr, the minister of natural resources, and Chrystia Freeland, the foreign minister, issued a statement saying they were prepared to go to court to fight the tariffs.
“Canada’s forest industry sustains hundreds of thousands of good, middle-class jobs in communities across our country,” it said. “The forest industry is one of the most innovative sectors of our economy, developing new products and expanding its markets overseas while ensuring our environment is protected for future generations.”
In reality, the imposition of tariffs was anticipated, irrespective of who won the race to the White House last November. The US has long been convinced that Canada is subsidising its lumber industry illegally, by allowing loggers to cut down trees at artificially reduced rates.
What was not expected was that the tariffs would be retrospective or that they would be linked to an entirely separate dispute over the dairy industry, even though Mr Trump had dropped a large hint via his favourite medium, Twitter. “Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!” he wrote.
You don’t create policy in a vacuum and that is what [Trump] is doing. It is just a show – he is puffing out his chest to show how tough he is
Even if the tariff is good news for the American lumber industry, it will not be without cost to the US economy. The National Association of Home Builders found that a 15pc tariff would increase new house prices by 4.2pc and cost 4,666 full-time jobs. With the average levy at 20pc, the cost could be even greater.
“This is really punitive,” says Steve Rustja, vice-president of trading at Weston Forest, a softwood and lumber company in Toronto. “It will make trading across the border really difficult. I think it will escalate, and we are expecting more taxes when the International Trade Commission adjudicates on an anti-dumping case.
“But this does reflect the increasing protectionism in the White House.”
His fear is that mills could be closed as the US uses tariffs on softwood as a weapon in a broader trade war.
Lewis Alexander, Nomura’s US economist, believes the announcement is not a complete surprise, given that the dispute over softwood has been festering. “This is what he ran on. It is a sign of him being consistent, but I was surprised Canada was brought to the head of the queue,” he says.
The decision to get tough with Canada does have some political logic to it, especially when it comes to the dairy industry. Wisconsin was one of the battleground states that catapulted Mr Trump into the Oval Office and being seen to do the right thing for the farmers will be viewed as delivering on his election promises.
Feelings have been running high in Wisconsin over what the dairy industry sees as unfair trade practices by Canada. The dispute centres on unfiltered milk (a product used in the manufacture of cheese), which US farmers ship north of the border. In April last year, farmers in Ontario slashed their prices, which has had a devastating impact on the Wisconsin economy.
Undercut by competitors north of the border, 75 Wisconsin farms were left with nowhere to sell their milk. Feelings in the US have been running high, uniting liberal Democrats and conservative Republicans. Dairy lobbyists have joined forces to demand the Trump administration take action.
The US dairy industry has long been unhappy at the tariffs – in some cases as high as 292pc – Canada has imposed on imported American milk products.
Last week Mr Trump was in Wisconsin and, to the delight of his audience, he promised to defend the agriculture industry. “We’re also going to stand up for our dairy farmers,” he said. “Because in Canada some very unfair things have happened to our dairy farmers and others.”
The day after announcing the tariffs, Mr Ross appeared in front of journalists and tried to lower the temperature by discounting suggestions that the levies could drive a wedge between Mr Trump and Mr Trudeau. “I don’t think this has anything to do with the personal relationship between Mr Trudeau and the president,” he said.
In Canada there are fears the dispute could escalate, says Sylvain Charlebois, a professor of food policy at Dalhousie University in Nova Scotia. “You could see the US imposing tariffs on other commodities, such as beef.”
The US and Canada have had a lumber-related dispute over Canadian subsidies for quite some time. What is interesting here is the timing
It is hard to escape a sense that the spat with Canada is as much to do with politics as economics. “The US and Canada have had a lumber-related dispute over Canadian subsidies for quite some time,” says Mauro Guillen, director of the Lauder Institute at the Wharton business school in Philadelphia. “What is interesting here is the timing. Is Mr Trump trying to send a message to Canada that he wants to get tough concerning Nafta or dairy negotiations? Or is he sending a signal to Mexico or China?”
Mr Trump has soft-pedalled on China and, apart from a tax on Mexican rubber, has done very little about the threat to jobs from south of the border.
The move on Canada has led some analysts to argue that the populist “America First” wing of team Trump has regained some influence.
Steve Bannon, Mr Trump’s chief strategist could not disguise his delight at the tougher White House stance. “He’s manically focused on these trade issues,” Mr Bannon said.
However, Steve Jarding, a lecturer in public policy at Harvard School of Government, is fiercely critical of Mr Trump and believes the move could be costly. “It’s horrible. He has singled out lumber and dairy, and they are not even covered by Nafta,” he says.
“You don’t create policy in a vacuum and that is what he is doing. It is just a show – he is puffing out his chest to show how tough he is. The whole thing is madness – it sets a precedent and other countries will retaliate.”