Montreal, April 24, 2017 – The U.S. Department of Commerce is about to announce its decision concerning tariffs on Canadian softwood lumber. At the moment, the industry is expecting tariffs of from 25% to 40%.
“The imposition of such high tariffs is the worst scenario that Canadian forestry sector producers and workers could imagine,” says Alexandre Moreau, Public Policy Analyst at the MEI. “Currently, the American market represents nearly 75% of Canadian softwood lumber exports, and 24,300 direct jobs depend on that market.”
For Quebec and British Columbia respectively, it is 5,150 and 15,000 direct jobs that would be put at risk by the imposition of tariffs. Forestry regions that depend mainly on this sector would therefore be severely affected by these protectionist measures.
“The case of softwood lumber is a perfect illustration of how protectionism generally provides benefits for a small number of people while harming a majority, and American consumers are not exempt from this logic,” adds Mr. Moreau.
The imposition of a 25% tariff would raise the average price of a new house by nearly C$1,300. This would have meant additional costs on the order of C$1 billion just for single-family homes built in the United States in 2016.
With the pending renegotiation of NAFTA, it is important for the United States, and Canada as well, to recognize that their protectionist measures are very costly for the millions of consumers situated on either side of the border. Indeed, Canada does not allow Americans access to its dairy, egg, or poultry markets, which are protected by tariffs of up to 300%. The cost for Canadian households adds up to billions of dollars.
“Putting supply management on the table would demonstrate Canada’s good faith and help convince the U.S. government to drop the idea of imposing tariffs on Canadian softwood lumber,” points out Mr. Moreau.
“To preserve and even expand economic relations between the two countries, it is imperative that politicians on both sides of the border resist the influence of lobby groups and come to the defence of the millions of consumers who pay the price for protectionism,” concludes Michel Kelly-Gagnon, President and CEO of the MEI.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
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