U.S. to Restrict Grain Imports From Canada : Commerce: America’s largest trading partner denies charges of dumping, threatens tariffs.

The world’s two largest trading partners edged closer to a trade war over wheat Friday after the United States said it will restrict imports of Canadian wheat, flour and barley beginning July 1.

Canada criticized the United States for not playing the free-trade game fairly and threatened to slap tariffs on U.S. chicken, wine, bourbon, pasta, canned fruits and bakery goods.

U.S. Agriculture Secretary Mike Espy said tonnage limits will be negotiated over the next 90 days, with a goal of limiting Canadian shipments to levels far lower than they are today.

Espy accused Canada and its Wheat Board of dumping grain at unfairly low prices in the U.S. market. The United States contends Canada uses “predatory pricing,” unfairly subsidizes its wheat and hurts U.S. farmers.

“We feel aggrieved because of the inordinate amount of wheat that is coming in from Canada,” Espy said. “We believe this (dumping) is the case.”

Canadian officials denied that Canada is dumping subsidized grain and said rising exports are the result of freer trade between the nations and higher U.S. prices caused by last year’s Midwest floods.

“We are very unhappy. We don’t intend to cave in, and we have not agreed with the American negotiations,” Deputy Prime Minister Sheila Copps told Parliament in Ottawa. “We intend to take action.”