Friday, April 28, 2017

The truth behind Trump’s “trade war” with Canada

Alexia Fernández Campbell · Tuesday, April 25, 2017, 5:56 pm

Trump didn't start the fight over Canadian softwood lumber

For 35 years, the US and Canada have been locked in an endless fight about imported lumber — a cycle of tariffs and truces that has repeated itself under every president since Ronald Reagan.

President Donald Trump, though, has found a way to use this otherwise mundane issue for political gain.

On Tuesday, Commerce Secretary Wilbur Ross announced that the United States will slap a 20 percent tariff on most Canadian softwood lumber imports, the kind of wood commonly used to build homes. The move was applauded by the US timber industry and widely framed as the beginning of a trade war between America and its northern neighbor.

But this is hardly a trade war. It’s more like the latest chapter in a long-simmering squabble between siblings — a squabble Trump has seized on because it fits his political narrative.

Here’s how the cycle goes. The American lumber industry periodically gets upset that it can’t compete with cheap Canadian softwood imports. It files an unfair trade case with the Commerce Department. Commerce prepares to levy tariffs on Canadian softwood lumber imports. Then both countries negotiate a truce, which usually involves Canada limiting timber exports to the United States. The truce expires, and everything starts over again.

Since the 1980s, the complaint-tariff-truce cycle has repeated itself six full times. We’re now somewhere in the seventh cycle.

“It never ends; it’s like Groundhog Day,” says Ben Cashore, director of the Program on Forest Policy and Governance at Yale University. Cashore had been researching this dispute for years, he says, until he realized that it would go on forever. “I thought there had to be a better use of my time.”

The big difference this time around is the politicization of the spat. Presidents and Cabinet members don’t normally publicize their response to such a mundane trade dispute.

But Trump’s campaign was defined by blaming free trade for American job losses and economic woes, so his administration’s decision to publicize the move is a political calculation: It makes his team appear to crack down on trade abuses, even though it’s just more of the same.

The administration will likely use the lumber issue, as well as a dispute over dairy, as leverage in upcoming NAFTA negotiations. And acting to protect the American lumber industry gives Trump an easy victory to claim before his 100th day in office this week. If history holds, though, the most likely outcome is a truce during NAFTA negotiations.

The United States imports billions of dollars in products from Canada

Compared to US trade with other countries, the trade deficit between the United States and Canada is relatively small: The US imports about $15 billion more worth of Canadian goods than it exports. That’s because Canadian businesses and consumers are a major market for US goods, and in 2015 they bought about $289 billion worth of American products.

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1 comment:

Svetlana said...

According to The report on US trade with Canada in 2016, US trade deficit with Canada in 2016 was $17,381.0 million, a 17.41% decrease over 2015.