First it was milk, and now it’s softwood lumber. U.S. President Donald Trump has apparently forgotten his early affection for Canada and its trading relationship with his country.
Trump’s government has announced it will slap duties on Canadian softwood that will average 20 per cent and will take effect on May 1. More duties are likely to be added in the next few months, possibly totalling 30 to 40 per cent. It’s a massive blow to the lumber industry in Canada, particularly in B.C.
American producers have long argued that Canadian companies get an unfair advantage because most of their trees are cut on Crown land, and provincial governments can reduce royalty fees to help their own producers. A lot is at stake, as Canada shipped $5.7 billion worth of lumber to the U.S. in 2016, making up about 30 per cent of all softwood lumber used in U.S. residential housing construction. Half of that lumber came from B.C.
With an election campaign underway in the province, it didn’t take long for the softwood issue to reach the campaign trail. B.C. Liberal Leader Christy Clark cancelled Tuesday’s campaign appearances so she and her advisers could plan a response.
NDP Leader John Horgan was quick to accuse Clark of sitting on her hands for the past months instead of ensuring a new agreement was negotiated before Trump could unleash some kind of protectionist action.
Certainly, Trump’s fulminations about trade during the campaign should have been a warning of what might happen should he be elected. But softwood lumber deals have been notoriously difficult, and the last one expired in 2015, so it’s unrealistic to expect Canadian negotiators to have made any headway in the fewer than 100 days Trump has been in office.
Trump also desperately needs to score some clear wins after being frustrated in his attempts to deliver quickly on his many campaign promises. Beating up on Canada will play well with the many voters who want him to put “America First.”
In this case, the American lumber lobby has hammered away at the issue for decades, so the constituency is there, and much of the hard work has already been done in shaping the U.S. position. The new president just had to make the fight his own.
As with so much that involves Trump, the challenge is in figuring out his real intentions amid his frequent inexplicable changes of direction. Even though lumber and dairy are not part of the North American Free Trade Agreement, this move fits with his intention to get a better deal for the U.S. by renegotiating NAFTA.
Canada does have allies in the U.S., where the National Association of Home Builders has warned that the tariffs would push up the price of new homes in that country. That will hurt homebuyers and cost jobs.
The jobs we are more concerned with are those of forestry workers in B.C. Large B.C. producers think they will have a better chance of weathering the storm because they have purchased sawmills in the U.S. and expanded exports to China, but such heavy duties will hurt.
The industry has already asked the federal government for financial support, but Ottawa wants to wait until the U.S. decides on all the duties and penalties. And the province fears that any aid would make the situation worse by appearing to help the industry unfairly.
Three outcomes are possible: a negotiated agreement, a retreat by the U.S. government or a court battle that stretches over years.
Since we can’t count on a retreat, B.C. and Canada must prepare to talk and to fight.