Trump of­fi­cials to im­pose 20% du­ties on soft lum­ber

Prime Min­is­ter Trudeau warns against ‘thick­en­ing’ U.S., Canada bor­der

The Washington Times Daily - - POLITICS - BY PAUL WISE­MAN AND CHAR­MAINE NORONHA

Pres­i­dent Trump has long railed about un­fair trade prac­tices of China and Mexico. Now he’s drawn a new tar­get — Canada.

The two coun­tries are in a sud­den and open fight over in­ex­pen­sive Cana­dian tim­ber and Canada’s bar­ri­ers to U.S. dairy prod­ucts — dis­putes that go back years, but rarely get such a pub­lic air­ing.

Be­fore sun­rise Tues­day in Washington, Mr. Trump went on Twitter to de­clare: “Canada has made busi­ness for our dairy farm­ers in Wis­con­sin and other bor­der states very dif­fi­cult. We will not stand for this. Watch!”

Hours ear­lier, his Com­merce Depart­ment had an­nounced plans to im­pose du­ties av­er­ag­ing 20 per­cent on soft­wood lum­ber im­ports from Canada. U.S. home­builders quickly warned that the move would drive up the cost of new houses.

The du­ties on Cana­dian lum­ber im­ports are “a pretty hard blow,” Gary Huf­bauer, se­nior fel­low at the Peter­son In­sti­tute for In­ter­na­tional Eco­nomics, said of the lum­ber sanc­tions. “The mes­sage here is that the U.S. not only talks tough, it acts tough.”

As a can­di­date, Mr. Trump had vowed to de­clare China a cur­rency ma­nip­u­la­tor and to rewrite or with­draw from the North Amer­i­can Free Trade Agree­ment be­cause, he said, so many Amer­i­can fac­to­ries had moved jobs to Mexico to ex­ploit low-wage la­bor. Yet once in of­fice, he soft­ened his stance, de­cid­ing not to sin­gle out China for its cur­rency pol­icy and of­fer­ing a draft rewrite of NAFTA that kept much of the orig­i­nal deal in­tact.

But now, the Trump ad­min­is­tra­tion is ramp­ing up the rhetoric against Ottawa.

“People don’t re­al­ize Canada’s been very rough on the United States,” Mr. Trump said Tues­day. “Every­one thinks of Canada as be­ing won­der­ful, and so do I. I love Canada. But they’ve out­smarted our politi­cians for many years.”

For his part, Cana­dian Prime Min­is­ter Justin Trudeau warned Tues­day that the coun­tries could suf­fer a “thick­en­ing” bor­der saying the two coun­tries are eco­nom­i­cally in­ter­con­nected, but it’s not a one-way re­la­tion­ship.

“There are millions of good U.S. jobs that de­pend on the smooth flow of goods, ser­vices and people back and forth across our bor­der,” Mr. Trudeau said at a news con­fer­ence.

He cited free trade in the North Amer­i­can auto sec­tor as an ex­am­ple of how a typ­i­cal car part can cross the bor­der up to six times be­fore it ends up in a fin­ished au­to­mo­bile.

“You can­not thicken this bor­der with­out hurt­ing people on both sides of it,” he said. “Any two coun­tries are go­ing to have is­sues that will be ir­ri­tants to the re­la­tion­ship. Hav­ing a good, con­struc­tive work­ing re­la­tion­ship al­lows us to work through those ir­ri­tants.”

In a way, the ten­sions are sur­pris­ing. The U.S. and Canada, among the most open economies in the world, en­joy a boom­ing cross-bor­der trade. Last year, the U.S. sold $267 bil­lion in goods to Canada (led by au­tos and ma­chin­ery), more than to any other coun­try. Canada sold $278 bil­lion in goods to the United States, led by fu­els, au­tos and ma­chin­ery.

The U.S. trade deficit in goods with Canada was just $11 bil­lion last year — a frac­tion of Amer­ica’s $347 bil­lion trade gap in goods with China.

But dairy and tim­ber have long be­dev­iled U.S.-Canada com­mer­cial re­la­tions.

U.S. lum­ber mills have been com­plain­ing about cheap Cana­dian im­ports since the 19th cen­tury. The two coun­tries have patched over their dif­fer­ences on Canada’s soft­wood lum­ber im­ports, most re­cently with a com­pro­mise that ex­pired in 2015.

The Obama ad­min­is­tra­tion sought a new ac­cord with Canada over soft­wood lum­ber. But Obama’s U.S. trade rep­re­sen­ta­tive, Michael Fro­man, now at the Coun­cil on For­eign Re­la­tions, says the Cana­di­ans de­cided to gam­ble on the new ad­min­is­tra­tion.

In­stead, Com­merce Secretary Wil­bur Ross this week an­nounced du­ties rang­ing from 3 per­cent to 24 per­cent on soft­wood lum­ber im­ports, ar­gu­ing that Canada un­fairly sub­si­dizes its in­dus­try.

“They’re gen­er­ally a good neigh­bor,” Mr. Ross said Tues­day. “But they still have to play by the rules.”

The U.S. and Canada are also wran­gling over dairy. Ottawa shields its dairy farm­ers from for­eign com­pe­ti­tion, reg­u­lat­ing prices and pro­duc­tion and tax­ing im­ports heav­ily.

But a new Amer­i­can prod­uct — a type of un­fil­tered milk used in cheese — had not been blocked by Canada’s trade bar­ri­ers. Cana­dian dairy farm­ers com­plained about the cheap im­ports com­ing across the bor­der. So Ottawa changed its pric­ing pol­icy, ef­fec­tively bar­ring un­fil­tered Amer­i­can milk.

Some Amer­i­can dairy farm­ers have been devastated.

Tim Prosser, a dairy farmer in Colum­bus, Wis­con­sin, was dropped by a buyer af­ter Canada made the change. Prosser says he and his father might have to shut down their busi­ness and sell their 100 cows if they can’t find a new cus­tomer by May 1.

“Even if we keep feed­ing the cows and milk­ing them, it still costs us money,” he said. “If we have to turn around and dump the milk, we’d be look­ing at a $35,000 loss ev­ery month.”

In a speech last week in Kenosha, Wis­con­sin, Mr. Trump de­clared that Canada has been “very, very un­fair” to dairy farm­ers and promised to “start work­ing on that.”

ASSOCIATED PRESS

Com­merce Secretary Wil­bur Ross an­nounced plans Tues­day to put a 20 per­cent tar­iff on im­ported soft­wood Cana­dian lum­ber. Pres­i­dent Trump tweeted on the same day about Canada’s mis­treat­ment of Wis­con­sin dairy farm­ers and oth­ers on the bor­der.

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