In a losing battle to erect a wall against our deadly enemy to the south, Mexico, Donald Trump has now turned his sights to our dreadful neighbors to the north – Canada. That’s right folks, those damned, polite Canadians who pose such a threat to our economy. But never fear, Donald Trump will protect us from their nefarious schemes.
No, this is not the opening paragraph of an article in The Onion. While the finer points of trade negotiations are beyond the ken of this writer, the imposition of up to a 20% tariff (read “tax”) on certain imported lumber from Canada, which was announced on Tuesday after negotiations over dairy products (which involve cows, not trees) fell through simply does not make sense.
Trump fired the opening salvo in an impending trade war with our Canadian neighbors in the following tweet
Someone needs to tell Mr. Trump that Wisconsin is not on the Canadian border. Other than that, why would issues regarding dairy farmers lead to a tariff on lumber products? According to a recent article in CNN Money, this is not the first time an American administration has declared that Canada unfairly subsidizes its lumber industry. Both Presidents Bush and Obama declared temporary tariffs on Canadian lumber using the same rationale.
In 2004 the World Trade Organization sided with Canada on the lumber issues. Canadian officials announced that they would litigate this matter again in the future. But in the meantime, it won’t be the Canadians paying for this tariff, it will be the American homeowner. This tariff is estimated to increase the cost of a new home by approximately $1,200.
Meanwhile, according to Fortune Magazine, Canadian Trade Minister Francois-Philippe Champagne is in China and said there had never been a better time to diversify exports. “There is enormous potential,” he said from Beijing, citing heavy Chinese demand.
But back to butter. While it is true, again according to the CNN article, that Canada imposes hefty tariffs on U.S. imported dairy products (up to 300%) these products make up less than 1% of our total exports to Canada. Is that fair to our dairy farmers? Do they deserve a bigger slice of the pie? Perhaps they do. But starting a trade war with one of our biggest trading partners hardly seems like the way to go about it.
Maybe Trump thinks that after his meeting with Canadian Prime Minister Trudeau he can bully the younger guy around. It would not be surprising if he mistakes politeness for weakness. But Canada is not going to roll over and play dead when it comes to trade.
“When it comes to defending Canada’s economic growth, we’re going to play hard,” Canada’s Foreign Minister Chrystia Freeland told CNN Tuesday. “We’re nice guys: Politeness is something we believe is a national virtue, but it is not an accident that hockey is our national sport,” she reported.
While Trump tweeted out this morning about trade deficits being bad for the economy
He might want to take a look at the numbers published by the United States Census Bureau for 2016:
Our trade deficit with China was -$347,037.9 as in millions.
By contrast, our trade deficit with Canada was -$11,240.1 again in millions
It doesn’t take a rocket scientist to see which country is hurting our economy “very badly.” It’s Trump’s new best friend – CHINA!