The softwood trade friction between Washington and Ottawa is not new. But the latest American action still raises fresh concerns.
Contrary to the rhetoric of the Trump campaign, more disputes in NAFTA have involved the United States vs. Canada than those with Mexico. Most have centered around the import of Canadian softwood lumber, with others around dairy. The disputes go back to the early 1980s.
Now in the White House, the first target of the Trump administration’s “get tough on trade” policy is not Mexico, not China, but our neighbor to the north. The United States intends to impose a 20 percent tariff on Canadian softwood imports (possibly rising to 24 percent). Washington has imposed duties before, based on complaints from American timber companies, but usually the two sides smooth things out until the next complaint comes along.
The heart of the argument is that most Canadian lumber comes from public lands, with Washington arguing that Ottawa and the provincial governments unfairly subsidize it by not charging timber companies enough for harvesting the trees. Canada, of course, denies this.
Americans will get a short course in trade. The country buys 69 percent of its software lumber from Canada. Most of it is used to build houses and apartments at a time when housing affordability concerns are widespread. The tariffs will raise prices here. The American forest-products industry doesn’t have enough capacity to fill the gap, at least in the short run. As a result, the bulk of the cost of the tariffs will fall on homebuyers and renters, as well as potentially dampening construction. Canada would have the right to impose tariffs of its own against the United States.
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