Canadian lumber tariffs needlessly harm US home builders, buyers
Avec la collaboration de Granger MacDonald*.
President Donald Trump campaigned to help average Americans — the hard-working men and women who put in long hours and deserve a break. He also pledged to fix areas where trade policies are hurting these workers. It might surprise him to know that doing away with tariffs on Canadian lumber could accomplish both in a very tangible way.
More than 3.8 million Americans make their living in residential construction. They’re not only making a living for themselves, but they are also helping others achieve the American dream of homeownership. These jobs — and this dream of homeownership — are directly attacked by import duties.
In recent years, duties on Canadian softwood lumber have hit 15 percent, and future tariffs could be 25 percent. On the southern side of the border, this would raise the price of a new home by about $1,000. The National Association of Home Builders (NAHB) estimates such a price hike effectively puts that new home out of reach for about 150,000 families.
If just the 15 percent tariff is renewed this spring, that would result in a loss of more than 4,600 American jobs and $265 million in lost wages and salaries.
The source of these duties and price increases is American lumber producers, who seek to protect their own market share. For more than 30 years, they have accused Canadian producers of taking advantage of the United States market to “dump” low-priced lumber.
But Canadian lumber producers have been found innocent of any wrongdoing every time they’re reviewed by international trade arbiters. The U.S. International Trade Commission has found that importing Canadian lumber does not threaten injury to the American industry — meaning there is no justification for slapping duties on the imports.
Unfortunately, American lobbyists and their friends in the government are so good at squeezing the Canadians that our northern neighbors will accept tariffs just to make it stop. This is unacceptable. It’s a bad way to treat any trading partner, and it’s certainly not the way we should treat our close friends.
Imposing duties on Canadian lumber will cause thousands of job losses on both sides of the border. Whether it’s an American home builder or a Canadian sawmill worker, those individuals should not be put out of work needlessly.
When Americans think of home builders, it’s easy to picture large developers, but the majority of the NAHB’s builders start 10 or fewer homes per year. About half of these builders have five or fewer employees. These are not faceless corporations; they are neighbors in our communities. They are the ones building and improving our communities.
It’s everyday people who are hurt the most by tariffs. The government tends to impose tariffs on materials that go into life’s necessities, like food, clothing and shelter. So it’s no surprise that countries with fewer trade restrictions are more prosperous than those that restrict trade.
According to The Heritage Foundation’s annual "Index of Economic Freedom", the United States isn’t even in the top 10 of the freest economies in the world. In fact, at No. 17, it has a ways to go. This is an area where America can indeed become greater, as President Trump promised.
Recently, the president said he planned to “tweak” trade agreements with Canada and Mexico. There is no better opportunity than the softwood lumber dispute with Canada.
The U.S. lumber lobby is pushing for new duties, once again accusing our Canadian neighbors of unfair trade practices. The Commerce Department will issue its preliminary determination April 24, giving us the first look at the new duty rate.
President Trump has called for an end to trade practices that harm American workers. This one certainly fits that description and harms American consumers at the same time. It hurts Americans who want to build a new home, their fellow Americans who want to help build those homes and anyone who buys products made with lumber.
It hurts Canadians who are growing and harvesting trees — whole communities that make their lives in the forest. All of this is perpetuated to fund one powerful interest group.
In our uncertain world, Canada remains a strong ally and a crucial trading partner. It is the number one supplier to the U.S. of crude oil, refined petroleum products, natural gas and electricity. Further, trade goes both ways — 35 American states export primarily to Canada as well.
President Trump will face many problems during his presidency. Canada is not — and should not become — one of them. It’s possible to forge an agreement that benefits American and Canadian workers and helps more people reach their American dream.
Michel Kelly-Gagnon est président et directeur général de l'Institut économique de Montréal. Granger MacDonald est président de la National Association of Home Builders. Ils signent ce texte à titre personnel.