Margaret Trudeau, wife of the Canadian prime minister, showed up in Washington last week wearing a big puffy hat made from the hide of a silver fox and a fox-trimmed coat. On the way home, she told a reporter she likes wearing animal skins because they look nice and it's good for the country's fur industry.

"But I would never wear a baby seal," Mrs. Trudeau added, casting her lot with the animal lovers and conservationists in the emotional and highly-publicized annual feud over the slaughter of newborn. Harp seals off Canada's east coast.

The six-week seal hunt is scheduled to begin March 12 amid sinister talk of blackmail and sabotage as opponents in North America and Europe try to shame the Canadian government, with bad publicity and big money, into calling the whole thing off.

But the government says it will not give in to the animal lovers and has even increased the quota for this year's hunt by one-third to 170,000 seal pelts.

The hunt takes place every spring on ice floes in the Gulf of St. Lawrence and on a forbidding moonscape of drifting ice off the Labrador coast called "the front." The Harp seals come swarming into these arms to bear their young before returning to sub-arctic waters.

Hunters from Norwegian sealing vessels and unemployed fishermen from Newfoundland villges and the Magdalen Islands in the gulf venture onto the ice with two-foot hardwood clubs and skinning knives. They kill the newborn pups with a single blow to the forehead that crushes the paper-thin skull.

The pelts go to Canadian and European fur industries. Some adventure some Newfoundlanders and native Eskimo seal hunters take the meat home for food. They consider seal flippers as something of a delicacy. Canners buy some seal meat and turn it into dog and cat food. Seal fat is sold and converted into an oil base for such diverse products as candy bars and perfume.

Seal-killing is a relatively modest $3.6 million industry in Canada, but much of the money goes to financially hard-pressed fishermen who can earn about $2,000 each during the spring hunt, a time of high unemployment.

The seal hunt is denounced every year in graphic, emotional terms by animal lovers who call it barbarous and wasteful. They tell grisly stories of baby seals being skinned alive while bleating mothers try to protect their young. The fishermen who kill the creatures and fisheries authorities say this is nonsense.

This year at least four groups are mounting publicity campaigns and direct intervention to, as one group put it, "sabotage" the hunt.

Swiss conservationist Franz Weber wants to save the lives of the 170,000 seal pups by paying fishermen not to kill them and by establishing an artificial fur industry in Newfoundland. Weber, 49, a former journalist, says he has set up a foundation to turn international public opinion against the slaughter. He says he will charter a ship later this month to carry several hundred reporters to witness the hunt.

In London, other protests are planned by the Greenpeace Foundation, the International Fund for Animal Welfare and Friends of the Earth. These groups are mobilizing public opinion among animal-loving Britons.

The animal welfare group plans to send 50 protestors onto the ice in five helipcopters to distrupt the hunt.The Greenpeace foundation, usually occupied with protests against atmostpheric nuclear weapons testing by the French and the Chinese, will send another 20 protestors.

The British press is also warming to the annual controversy. The BBC included a story on the hunt in a recent news program for children and commercial television ran a Greenpeace-produced film depicting the slaughter. British press oppositin is usually led by the flamboyant London Daily Mirror, which has conducted annual campaigns against the hunt since 1968. The Mirror publishes graphic accounts of the killing with descriptions of blood-soaked ice floes and reporters' eyewitness declarations such as this one: "I heard a 'dead' seal scream twice as the skinning knife was plunged into its body."

In Ottawa, the protests have had little effect on government fisheries authorities. Fisheries Minister Romeo Leglanc emerged from a frosty private meeting with Weber saying that Canada "won't give in to international blackmail." Weber's wife, Judy, meanwhile, was busy selling $20 seal pup dolls, the profits to be used to set up the proposed synthetic fur industry.

"If Weber wants to buy the fishermen's efforts he'll have to take it up with them," Leblanc said.

Weber was in Newfoundland and Quebec last week where the fishermen rejected his proposals.

As unemployed fisherman Selby Wiseman of Notre Dame Bay, Newfoundland, put it, "Those people are a crowd of nuts."

Richard Cashin, president of the Newfoundland Fishermen, Food and Allied Workers' Union, said he had no patience with "so-called humanitarians who want to give the seal a soul."

"We're going to fight for our way of life and we're going to tell the rest of the world to stuff it," Cashing said.

Last year, protestors ventured onto the ice with cans of sppray paint and succeeded in saving a few seals by spraying them and rendering their pelts valueless. But they complained of government interference in their efforts to thwart the hunt. Authorities refused to allow some helicopter pilots to carry protestors to the ice and Newfoundland suppliers would not sell provisions to them.

Conservationists say the hunt will eventually destroy the Harp seal herds and that the 1977 quota will allow hunters to take up to 90 per cent of newborn seal pups. The Canadian government views the seals, although they are warm-blooded mammals, as another fish stock to be harvested under a quota system set up by international agreement with Norway, the other major seal-hunting country.

Leblanc's officials say the total Harp seal population is now about 1.3 million, compared with more than 3 million two decades ago. An annual slaughter of up to 250,000 pups will still enable the total population to increase and stabilize at its former size.

They say the killing is no more cruel than the slaying of cattle in slaughter houses but appears to because it is done in the open.

"The degree of repugnance is multiplied enormously when large numbers of animals are slaughtered in public view," the government says in response to the protestors. "Cruelty is not of necessity part of mass killing."

Seal-hunting regulations specify use of a hardwood club 24 to 30 inches long beeause it is considered the quickest way to dispatch the creatures. The regulatins say seals must be struck on the forehead and "no one may hook, commence to skin, bleed, slash or make any incision with a knife or any implement until the seal is, without doubt, dead."

Fisheries officials scoff at stories of seals being skinned alive, saying it is impossible to do so. What's more, the creatures are not all that likeable, despite their soft round faces and big brown eyes, they say.

The mothers routinely abandon their young and do not display the protective instincts described in lurid news reports of the killing. In addition, the seals are carriers of the parasitic cod worm that finds its way into commercially caught fish. Grown seals are voracious eaters, consuming up to a ton of food each annually. They have a special fondness for herring.

Crusty Maritimers even tell stories of seals turning nasty. One Member of Parliament from the Maritime Provinces insists that a seal herd once came on shore "and ventured inland, frightening small boys."

Leblanc recently told Parliament that the government will not condone interference with seal-hunters involved in earning "an honest-to-goodness living."