Lumber

Trump’s First New Tariff on a Foreign Country: Canada

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Lumber tariffs up to 24% are being imposed by Trump on Canada.

During his presidential run, Trump repeatedly spoke of “America first,” and threatened tariffs on China and Mexico. These threats received voter support, but the first tariff imposed by the president was on the U.S.’s northern neighbor.

The lumber tariffs were announced Monday after trade talks on dairy products fell through.

There is talk of a trade war between Canada and the U.S. Currently, the two nations and Mexico are preparing to renegotiate NAFTA.

The U.S. government is thought to be motivated by a desire improve prospects for American lumber companies, who complain that subsidies provided to Canadian companies by the Canadian government create an unfair playing field. Canada exported a reported $5.6 billion worth of softwood to the U.S. last year.

Trump Doesn’t Fear Trade War Because of Canada’s ‘Tremendous Surplus’

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Trump’s response to questions about whether he feared a trade war with Canada after his new taxes on lumber imports was, “Nope. Not at all.”

The reason, Trump said, was, “They have a tremendous surplus with the United States. Whenever they have a surplus, I have no fear.”

He also told reporters, “They’ve outsmarted our politicians for many years, and you people understand that.”

Canada and the U.S. charge their forestry companies differently for the trees they cut down. In the U.S. companies compete and bid for trees. In Canada, the provincial governments charges fees to companies which happen to be lower than the market price U.S. companies pay. American companies complain Canada’s system is an unfair subsidy.

The tariffs are expected to add around $1200 to the price of new homes since taxes are always passed on to consumers, although lumber prices have already started to move up in expectation of an increase in cost.

Analysts expect that Canada may fire back by taxing American imports to Canada.