If the recent ugliness between Canada and the U.S. has you yearning for a friendlier era, maybe the trade issue du jour — a good ol’-fashioned fight over lumber — will take you back to simpler times.
What happened: Donald Trump ordered an investigation into whether lumber imports — nearly half of which come from Canada — constitute a threat to America’s national security.
- A White House official claimed the U.S. dependence on imported lumber constituted a national security threat because the military used it for construction projects.
Why it’s happening: National security concerns are likely a fig leaf for a long-standing complaint articulated by Trump’s senior trade advisor Peter Navarro, who alleged that Canada is “dumping” its lumber into the U.S. market.
- This long-standing gripe — that Canadian softwood lumber producers sell into the U.S. market at an artificially low price to undercut American producers — has been a source of irritation in the U.S.-Canada relationship for decades.
Why it matters: 84% of Canada’s nearly $20 billion of wood exports go to the United States — large tariffs on those goods would hurt the forestry sector, which directly employs over 37,000 people.
- The U.S. is already levying duties of nearly 15% on most Canadian lumber producers, a tax that experts believe could rise to as much as 55% if the Trump administration starts stacking new tariffs on Canadian goods.
Yes, but: The U.S. economy would also feel higher tariffs on Canadian lumber — an industry association representing American homebuilders warned such a move would increase house prices and discourage new construction.—TS