OTTAWA, ON. (NEWS 1130) – The Canadian dollar dropped a bit this morning after it was revealed the US is going to impose a tariff of anywhere between three to 24 per cent on Canadian softwood lumber exporters.
US President Donald Trump feels the Canadian industry is unfairly subsidized and that it’s hurting US producers. He says Canada has “outsmarted” the US for a long time, but his administration is “not going to put up with it.”
The Canadian counter-argument is US consumers will have to pay more to build homes and buy furniture. The trade of softwood lumber and disagreements between the two countries started back in the 1980s and has had fights and trade deals all the way to the World Trade Organization over that time frame.
The last agreement expired nearly two years ago.
— Cormac Mac Sweeney (@cmaconthehill) April 25, 2017
The BC government says the duties, in the form of cash deposits, would become effective around May 1st for at least four months, ending in August. After that, duties won’t be collected until next January.
Prime Minister Justin Trudeau says the Canada-US relationship is bigger than any one trade irritant and that both countries would suffer from a “thickening” border.
When asked about the increasing trade tensions with the US, he notes disputes over lumber and dairy have go back decades.
“I will always defend Canada’s interests. This is nothing new and this is part of the relationship that is positive, that is deep in so many different ways that we will deal firmly and reasonably with them.”
The Prime Minister says he’ll be speaking soon with premiers about Canada’s approach to these trade conflicts and then he plans to speak with President Trump directly to emphasize the good trade relationship Canada can offer.
He says it’s true Canada has a deeply interconnected economic relationship with the US, but that the opposite is also true. He says millions of good US jobs depend in Canadian trade, citing the North American auto sector as one compelling example.
BC political leaders
While promising to fight plans to raise tariffs as much as 24 per cent, BC Liberal Leader Christy Clark not only takes a fighting stance against what she calls a knee-jerk response from the NDP, she’s also attacking former US President Barack Obama. “The Obama administration did not want to deal. They talked a good talk and they wrote a nice press release and it all looked really good on paper, but they never ever were interested in getting a deal.”
At a lumber mill at Maple Ridge, Clark cautioned against knee-jerk reactions that could jeopardize negotiations.
“This needs to be calm. Cooler heads need to prevail.”
— Kurtis Doering (@KDnewsguy) April 25, 2017
BC NDP Leader John Horgan says, if elected, he will go to Washington in his first 30 days as premier to “fight tooth and nail” for BC interests. “After sitting idly by and watching 30,000 fewer people work in the forest sector over the past 16 years, I’m not surprised that Christy Clark and the BC Liberals are doing nothing.”
Thousands of people in this country could lose their jobs if these duties stay in place, according to unions representing those workers. Unifor is throwing around possibilities of a worst case scenario.
It says about 25,000 people could be out of work, according to Unifor, which fears if these tariffs stay in place, softwood exports to the US could be chopped in half. And it claims that number when it comes to job losses is a “conservative” estimate.
“Our softwood lumber is our number three export industry in Canada. So, we need to make sure that we shore these companies up. We need to shore up the communities immediately,” says Gerry Dias is Unifor’s national president.
As a result, Unifor is calling for the federal government to set up loan guarantees for mills, and government assistance for communities should these job losses happen.
Impact on local wood
Forestry is easily one of BC’s most important industries and those levies will have a major impact one way or another.
“Forestry has really consistently been a sustained source of wealth for a lot of Canadians and for the province,” explains Harry Nelson with UBC’s Faculty of Forestry. “It can hit all those bottom lines, be environmentally-sustainable, and contribute towards more environmentally-friendly, lower-carbon lifestyles.”
But he says none of this is a surprise, adding the two countries have bickered over softwood lumber for decades.
In fact, there have only been a few years of entirely free trade in the industry. “And we know the effect of that has been essentially to restrict Canadian supply and the outcome from that is to basically boost lumber prices in the US and that’s really first and foremost what that dispute has been about,” says Nelson.
He says it will be mainly the family-owned businesses dotted across the province that bear the brunt of the new tariffs but that this won’t be the end of a dispute that spans more than 30 years.
Former US Ambassador
The former US Ambassador to Canada has a message to President Donald Trump: stop waging a public war over softwood lumber and hash everything out behind closed doors.
“The United States can’t count on anyone more than we can count on historically our relationship with Canada at every level,” says Bruce Heyman.
“I don’t think Americans would think about taking your best friend and start poking at him –even if you have differences of opinion on something, that’s when you take your best friend and you sit down and say, ‘C’mon, we’re new in this administration, we really have some issues. Let’s sit down and work through them.’ ”
On @BloombergTV I made the point there isn’t a more important country to the USA than Canada.As friends we can&will work out any differences
— Bruce A. Heyman (@BruceAHeyman) April 25, 2017
Heyman says Prime Minister Justin Trudeau has no choice, but to retaliate.
“The President and the White House are using communication and going public with what they consider to be irritants in things that they want to resolve. Before we actually even sit down and negotiate in the room across the table from each other –which makes it very challenging.”
He adds Canada is the number one export market for no less than 35 US states.