This can’t be good for business: the impact of Trump’s new lumber tariff

 

By Laura Bohnert

 

We can all thank Trump for the new lumber tariff (go ahead, I’ll wait. I hear he likes it when people Tweet about him), but how much of an impact is it going to have on local business?

 

A pretty significant one, and many Alberta forestry communities are already bracing themselves for an uncertain market.

 

The lumber war isn’t a new thing. It began in 2015, when the decade-old agreement between Canada and the US expired, and it stems from a long-standing debate over whether Canadian companies’ access to public land constitutes a subsidy. The US concluded that the benefit Canadian companies receive from “unfair” subsidies ranges between three and 24.12 per cent, and that this is hurting US producers. Their solution? Impose three to 24 per cent tariff on five Canadian softwood lumber exporters: Canfor (20.26 per cent), Irving (3.02 per cent), Resolute (12.82 per cent), Tolko (19.50 per cent), and West Fraser (24.12 per cent).

 

Of course, that isn’t all. The US also says these duties will be collected retroactively for the past 90 days, too.

 

This comes atop Trump’s now hesitant decision to renegotiate NAFTA, of which neither Canada’s lumber industry nor dairy industry are a part.

 

Many, including Natural Resources Minister Jim Carr, are displeased with the new tariff: “The Government of Canada strongly disagrees with (this) decision to impose an unfair and punitive duty,” he quotes, adding that “The accusations are baseless and unfounded,” but also pointing to the fact that this could decision could hurt both sides of the border, American homebuyers, who will now pay more for lumber, as well as Canada’s lumber sector, which employs hundreds of thousands.

 

Alberta softwood lumber exports close to 50 per cent to the US, and this comes at a time when many of the Alberta communities who are tied to the lumber industry are already hurting from the recent recession—there have already been requests from Canada’s forestry sector for financial help.

 

“If our economy was a little bit stronger and we saw more housing starts, the forest industry would see our Canadian market absorb the loss they’ll see into the States,” says Whitecourt Mayor Maryann Chichak, adding that this issue perfectly emphasizes Alberta’s—and Canada’s—need to expand the trade market outside the US.

 

Woodlands County Mayor Jim Rennie points out that a lot of Alberta communities heavily rely on forestry jobs, including Woodlands County, where one in five jobs is tied to the industry.

 

The only thing worse for the industry in the area, both mayors point out, is the long, drawn-out process the dispute creates for Canada and the US—the fifth one the lumber industry has had to endure since 2015.

 

A 20 per cent tariff “isn’t as bad as what some had predicted,” Rennie quotes, and Chichak adds that she doesn’t anticipate immediate job losses as a result of the tariff, but both agree that the real burden on the industry—one that is recovering from a recession and still battling the mountain pine beetle—is the market uncertainty that will happen as the trade dispute lingers.

 

“The longer this dispute stays in place,” Chichak quotes, “[the greater] the potential for job losses, both in the immediate and in the long term.”