President Trump may be starting a trade war with one of our neighbors – over trees. Excerpt:
Speaking during a first of its kind meeting dedicated only to members of the U.S. conservative media, including Breitbart News, OANN and Daily Caller, President Trump told reporters to expect a 20% tariff on softwood lumber coming into Canada.
“We’re going to be putting a 20 per cent tax on softwood lumber coming in — tariff on softwood coming into the United States from Canada,” tweeted Charlie Spiering of Breitbart Media.
Trey Yingst of OANN tweeted that according to Trump “Canada has treated us very unfairly” and also threatened a tax on Canada’s dairy industry.
According to the WSJ, Wilbur Ross said the tariff will be applied retroactively and imposed on Canadian exports to the U.S. of about $5 billion a year. He said the dispute centers on Canadian provinces that have been allegedly allowing loggers to cut down trees at reduced rates and sell them at low prices. “The determination that Canada improperly subsidizes its exports is preliminary, and the Commerce Department will need to make a final decision. In addition, the U.S. International Trade Commission will need to find that the U.S. industry has suffered injury. But even a preliminary decision has immediate real-world consequences, by discouraging importers from buying lumber from Canada.”
I’m not sure this is such a good idea.
Whenever you restrict the supply of a commodity, whether by regulation, tariff or any other method – you raise the price of that commodity. Now, think of one thing, one product, that almost everyone needs, and think of what they are largely made of.
The answer to that: Houses, and wood.
Raising the price of wood will raise the price of housing. Real estate prices have always been up and down, but lately, across most the U.S., they have been up. That’s great if you already own a home; the added equity is money in your pocket. But if you’re a young couple starting out, it puts that first starter home a little farther out of reach.
It’s too bad we can’t deal with purveyors of bad economic policy by simply casting them adrift.