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Conservative candidate Kevin O'Leary warns US not to pick a trade fight with Canada

Canadian Conservative candidate Kevin O'Leary said Tuesday that the U.S. should not pick a trade fight with its northern neighbor.

"By the time it's over softwood lumber, automotive parts, milk would all need to be renegotiated," the "Shark Tank" star who is running to lead Canada's Conservative Party said on CNBC's "Halftime Report."

O'Leary, who is one of more than a dozen candidates vying to lead the party in a May 27 election, used the possibility of President Donald Trump picking a fight with Canada over a high tariff on imported dairy products to highlight his concern.

"If all of a sudden we have to say let's get rid of supply-side management in Canada, you have to do it in Vermont. You have to do it in Wisconsin. And by the way, the milk market in the United States is 10 times bigger. You will wipe out millions of farmers and the supply chain and all the people they work with."

O'Leary's comment came a day after Commerce Secretary Wilbur Ross said his agency will impose new anti-subsidy tariffs averaging 20 percent on Canadian softwood lumber imports.

In an interview on "Squawk Box," Ross said, the tariff is not the beginning of a trade war with Canada. He said it showed Trump is making good on promises to hold Canada accountable for unfair practices such as those that have hurt American dairy farmers.

The new U.S. tariffs on Canadian softwood lumber will also mean that fewer American families will be able to afford buying a home, Canada's foreign minister told CNBC on Tuesday.

Minister Chrystia Freeland said the action by the U.S. has not started a trade war, and that the U.S. and Canada have one of the best relationships in the world.

But, she added, Washington needs to realize something.

"You need our lumber. You need our lumber to build your homes," Freeland said on "Halftime Report."

"Lumber prices are already very high in the United States. They gone up about $3,000 per house this year, and for every $1,000 in increase of the price of a house, U.S. homebuilders estimate that means another 150,000 U.S. families can't afford a home," she said.

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."

CNBC's Matthew J. Belvedere contributed to this report.