By: The Working Forest Staff
CANADIAN PRESS — U.S. President Donald Trump took to Twitter a day after imposing tariffs on steel and aluminum to call out Canada’s softwood lumber industry, a sector that could provide insight for others on resilience in the face of tariff adversity.
Trump criticized Canada’s softwood lumber and agriculture policies, using them as examples of how America is being treated poorly by Canada.
“Canada has treated our Agricultural business and Farmers very poorly for a very long period of time. Highly restrictive on Trade! They must open their markets and take down their trade barriers!” the President tweeted Friday.“They report a really high surplus on trade with us. Do Timber & Lumber in U.S.?”
Canada’s softwood lumber sector has been dealing with the latest U.S. tariffs to hit the industry for nearly a year, handing over more than $200 million in 2017 to cover duties of about 20 percent of the value of all exports.
Hundreds of millions more are expected to be deposited in 2018 as well.
The lesson to be learned by Canadian industry is that the disputes aren’t about fact, subsidy or national security, said Susan Yurkovich, president of the BC Lumber Trade Council.
“This is about protectionism and sadly this is the lesson that the steel and aluminum folks are learning just as lumber has learned time and time again.”
However, the Canadian lumber industry has been less damaged than had been anticipated as duties imposed by the U.S. government have been passed on to U.S. consumers in the form of higher prices.
At the same time, Canadian lumber exports south of the border have decreased, impacting 2,000 to 3,000 jobs that would have otherwise been created, said Michael Burt, executive director of Industry Trends at the Conference Board of Canada.
Such facts, he said, show how Trump’s view of trade is overly simplistic.
“I think it really just boils down to this very mercantilist viewpoint that the U.S. administration has that imports are bad, exports are good,” he said.
“The world we live in is much more nuanced than that and supply chains can be quite complex.”
Soaring demand for lumber from the booming U.S. housing construction sector, where housing starts are higher than they have been in a decade, has helped pushed prices to hover near record highs at US$658 per thousand board feet, according to Madison’s Reporter.
“It’s not entirely dissimilar with steel,” said RBC senior economist Nathan Janzen. “Steel prices were already rising before the U.S. imposed tariffs because of the stronger global economy and the stronger industrial sector across North America.”
The U.S. has a shortage of domestic supply of steel and aluminum, while prices have risen almost 40 percent since Trump announced tariffs in March when he temporarily exempted Canada.
The country used 106 million tonnes of steel in 2017 but only made 82 million tonnes domestically, with Canada exporting 5.7 million tonnes to the U.S.
In addition, it used 5.5 million tonnes of aluminum last year, largely imported from Canada, but only produced about 700,000 tonnes domestically.
The federal government said Thursday that it would impose dollar-for-dollar counter-tariffs on $16.6 billion worth of United States goods in response to the end of exemptions for Canada, Mexico, and Europe from import duties of 25 percent on steel and 10 percent on aluminum.
Ontario Liberal Premier Kathleen Wynne says her first priority if re-elected will be to support the province’s steel industry in the wake of newly announced U.S. trade tariffs.
It’s unknown if Ottawa will offer its own package as it did by offering lumber companies loans and loan guarantees as part of its $867 million Action Plan to help smaller lumber producers deal with the tariffs.
Janzen said the steel and aluminum tariffs are a unique result of Trump policies whereas softwood lumber has been an irritant for decades.
“You almost would have been expected to see some softwood lumber dispute regardless of who was the president. Steel and aluminum and the NAFTA tariffs are more unique to the Trump administration.”
International Trade Minister Francois-Philippe Champagne, however, was reluctant to draw links between the softwood lumber and metals industries.
“Any tariffs like that are unacceptable. I don’t want to compare industry to industry,” he said in a conference call Thursday from Paris where he was attending ministerial meetings.
The big similarity between softwood lumber and steel and aluminum is that the U.S. is going after key sectors of Canada’s economy, said Jerry Dias, president of Unifor, Canada’s largest private-sector union.
After trying to negotiate a resolution to softwood lumber and then NAFTA, the federal government had no choice but to retaliate, he said.
“If the United States would have been able to hammer us on steel and aluminum based on what they have historically done with no reaction from Canada, I think we would have looked foolish and I think we would have looked weak.”