The Great White North – in all its rugged beauty; it’s one of the few international treasures we have left. A place where polar bears roam and grand forests span the landscape — forests that President Trump believes are hampering America’s ability to gain access to fair prices for wood. Canada’s low lumber prices mean that it’s harder for American lumber companies to sell their wood on the international stage; higher prices mean we just aren’t competitive with our northern neighbors. Because of that, the U.S. could end up in a trade war with Canada.
But the US-Canadian war over lumber prices is hardly new. In fact, it’s one of the longest-standing trade battles that exist on the international stage. For the last two decades, that fight has largely simmered under the surface, controlled by other beneficial relational factors between both countries.
It’s also not the first time either country has blocked or impeded trade over prices. Canada placed sanctions on the U.S. dairy industry several years ago that served to block dairy imports into Canada. The move, while seeming unnecessarily harsh to some, effectively protected Canadian dairy interests, but was heavily criticized.
Trump’s new tariff adds on a three to 24 percent fee to all Canadian lumber exported into the United States. That’s forcing Canadian lumber companies to compensate by lowering prices dramatically — often to the point where they’re losing dangerous amounts of money.
The U.S. Government claims that tariffs are necessary to offset the Canadian government’s free and easy access to lumber. Rather than making companies buy up private land, Canada’s government relies on Crown land — areas of forest owned by the government and are specifically used for sourcing lumber. Because companies don’t have to purchase land outright, costs of operation are much, much lower.
The initial announcement was so impactful that the Canadian dollar itself dropped to its lowest point in over a year, closing Tuesday at 73.72 cents USD. Other industries, even within the USA, have also been affected; expect the price of a new home throughout most of America to rise across the board by nearly $4,000 thanks to increased lumber prices. The change will also significantly impact construction workers on either side of the board, and could impact both American and Canadian wages indirectly.
If trade negotiations break down further, the US could place a total block on Canadian lumber. That’s bad news for both America and Canada, but would it really aid the US in protecting its own interests? Likely not. Canadian officials are already reporting a shift to exporting to China instead — the country’s second-largest lumber export. Unlike the USA, China’s own lumber industry is sorely lacking. The influx from Canada and lower prices would be welcomed, not viewed as a threat.
But the President seemingly believes that cheap Canadian problems are enough of a problem to threaten further action. He delivered a strong message on Tuesday.
“Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!”
President Trump also called Canada a “NAFTA disaster” and indicated that any further trade disagreements could lead to a total overhaul of NAFTA itself.