Why Is Trump Risking a Trade War With Canada?

Donald Trump is not the first U.S. president to tangle with Canada over lumber. In fact, the first U.S. president to do so was the first U.S. president. George Washington’s administration saw a dispute over ownership of valuable forests on the border between New Brunswick and present-day Maine.

So despite Trump’s recent tough talk about the trade relationship with America’s neighbor to the north, his announcement Tuesday morning of new tariffs on Canadian lumber is actually consistent with what U.S. policy has been for decades. Where Trump differs from previous presidents, though, is in very publicly sounding off about a longstanding disagreement. In so doing he has also, apparently, found a new target for his trade-related ire, even as he softens his stances toward previous targets like China and Mexico.

“We’re going to be putting a 20 percent tax on softwood lumber coming in—tariff on softwood coming into the United States from Canada,” Trump said Tuesday morning. Actually, the Commerce Department is levying tariffs on a range of Canadian lumber companies, with the average coming to around 20 percent.

It’s not just wood that’s at issue. Tuesday morning, Trump tweeted:

He’d previously complained about the dairy issue during an appearance in Wisconsin. Also Tuesday, Commerce Secretary Wilbur Ross issued a statement attacking Canada:

It has been a bad week for U.S.-Canada trade relations. Last Monday, it became apparent that Canada intends to effectively cut off the last dairy products being exported from the United States. Today, in a different matter, the Department of Commerce determined a need to impose countervailing duties of roughly one billion dollars on Canadian softwood lumber exports to us. This is not our idea of a properly functioning Free Trade Agreement.

Both the lumber and dairy issues are enduring matters of dispute between the U.S. and Canada, though for slightly different reasons.

The Canadian lumber industry functions differently from that of the United States. In the U.S., most logging is done by private companies on privately owned land. The Canadian timber industry operates largely on public lands, with companies paying a fee to harvest. U.S. logging companies charge that this constitutes an unfair government subsidy, allowing Canadian producers to flood the American market with cheaply produced softwood (from fir, spruce, pine, and other coniferous trees).

Every few years this dispute flares up, and then the Canadian and U.S. governments reach an agreement—often under pressure from American builders, who are upset about paying higher costs for wood—that sets some sort of quota on imports to the U.S. to appease all parties. The latest agreement, signed in 2006, expired in 2015, leading…

Read the full article at the Original Source..

Back to Top