Trump: Do not fear a trade war with Canada 3:52 PM ET Tue, 25 April 2017 | 02:11

Trump has called the move "a disgrace" that's hurting U.S. producers in dairy states like Wisconsin.

"It has been a bad week for U.S.-Canada trade relations," said Commerce Secretary Wilbur Ross in a statement. "This is not our idea of a properly functioning free trade agreement."

Canadian officials rejected the White House's assertions that its lumber industry is unfairly subsidized and urged the Trump administration to negotiate a settlement.

"You need our lumber to build your homes," Canada's minister of foreign affairs, Chrystia Freeland, told CNBC on Tuesday, noting that lumber prices have been rising. "If the market was being flooded by cheap Canadian lumber, you wouldn't see that happening right now."

The U.S. runs a trade deficit in lumber with Canada, importing more wood than it sends across the northern border. U.S. producers complain that their Canadian competitors enjoy an unfair advantage by harvesting timber more cheaply on federally owned land, while American timber is largely grown on private land.