Prime Minister Justin Trudeau has warned Canada and the US could suffer a "thickening" border as the Trump administration imposes new tariffs on softwood timber and trade tensions between the two countries escalate.
Trudeau's comments come a day after the US announced duties of up to 24 per cent on softwood timber entering from Canada.
"There are millions of good US jobs that depend on the smooth flow of goods, services and people back and forth across our border," he said.
"You cannot thicken this border without hurting people on both sides of it."
Trudeau cited free trade in the North American automotive sector as an example of how a car part can cross the border up to six times before it ends up in a finished car.
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Natural Resources Minister Jim Carr said the tariff hurts people in both countries, including American homebuyers, who will now pay more for wood.
The US and Canada typically enjoy a friendly trading relationship but things have soured in recent months.
Canada recently decided to change its policy on pricing domestic milk to cover more dairy ingredients, leading to lower prices for products, including ultra-filtered milk.
Trump has called the move "a disgrace" that hurts US producers in dairy states like Wisconsin.
He tweeted on Tuesday Canada is making life "very difficult" for American dairy farmers and that the government "will not stand" for it.
Officials say Canada is not likely to challenge the new tariff legally under the North American Free Trade Agreement (NFTA) or with the World Trade Organisation until next year.
The softwood spat is unfolding amid renegotiation of the NFTA although timber nor dairy are part of the current agreement.
