“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.”
Or, as a WSJ associate editor put it, “Blame the Chinese, but tax the Canadians:”
— John Bussey (@johncbussey) April 24, 2017
“We tried to negotiate a settlement but we were unable,” Mr. Ross said, adding that previous administrations have also been unsuccessful in resolving the dispute.
Speaking to the FT, Wilbur Ross said that the US would impose tariffs ranging from 3 per cent to 24% on five Canadian lumber exporters. The Canadian companies are Canfor, J.D. Irving, Resolute FP Canada, Tolko Marketing and Sales and West Fraser Mills.
“This has been another long-standing dispute with Canada,” said Ross. “These duties will be applied retroactively, 90 days backward, because they were on notice that this was forthcoming and they didn’t change the practice of dumping subsidized lumber.”
Ross also told the FT that the Canadian provinces that own the forests from where softwood lumber is sourced were subsidizing logging activities, which allowed Canada to then dump the lumber in the US at below-market prices.
“It is around $5bn a year worth of lumber that comes in this way. And the Canadians have roughly a 31.5 per cent market share of the whole US softwood lumber (market),” Mr Ross added.
The Trump administration had already notified Canada of its intent to impose the tariffs, a measure which comes as Trump approaches his 100th day in office on Saturday and is another example of his intent to take a more protectionist approach to trade policy.
The tariffs have been anticipated since last week when Trump launched a barrage of criticism against Canada’s dairy, energy and lumber sectors. As Global News adds, the expected announcement from the U.S. Commerce Department on countervailing duties, a type of import tax meant to counter a subsidized export, is just the latest in the ongoing Canada-U.S. softwood row, which stretches back to the 1980s.
Previously, President Trump said the Canadian system of protectionist dairy quotas is harming U.S. farmers, and that he’ll press Canada for changes to its dairy system as part of North American Free Trade Agreement talks.
Last week, Prime Minister Justin Trudeau said the U.S. has a $400m dairy surplus with Canada adding “it’s not Canada that’s the challenge here.”
The dispute largely stems from the fact most Canadian lumber is harvested on government-owned land while American lumber comes mainly from private land. The American lumber lobby has long accused Canadian governments of allowing companies to cut wood for less than market prices, which they say is an unfair subsidy.
The announcement is also the latest escalation in US trade wars under the new administration, and comes just hours after China warned it would retaliate if the US imposed tariffs on its steel imports.
In separate comments, Breitbart’s Charlie Spireling reports that when asked about Assad’s existing stockpile of chemical weapons, Trump responded “Wait and see if he uses them again, OK?”
Trump also discussed the North Korean situations, and said “this should have been done by Obama and it should have been don by every president since, really, Clinton.” Asked about Kim Jong-un’s military capacity, Trump replies: “I’m not so sure he’s so strong like he says he is, I’m not so sure at all.”
There was immediate selling in the Loonie.
Which just broke to the weakest in 4 months against the US dollar.
And with lumber prices already at 13-year highs, one can only imagine what this will do to the price of houses in America.
Canadians have had a tough time of it recently: they are getting inundated with illegal immigrants (thanks to Trudeau’s welcome) and not benefitting from the wholesale emigration north that so many liberals promised if Trump was elected; housing has become unaffordable due to Chinese hot money flows encouraged by the government; the Canadian energy industry is hosed because of US shale production-driven low prices; and now the US imposes trade tariffs on another of their biggest exports.
The iShares S&P Global Timber & Forestry Index (NASDAQ:WOOD) was unchanged in premarket trading Tuesday. Year-to-date, WOOD has gained 10.47%, versus a 6.10% rise in the benchmark S&P 500 index during the same period.
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