As the world was curious on how the Trump administration will proceed regarding bilateral trade imbalances, the office makes a first, swift move. However, instead of the much criticized Chinese country, the target of the raging decision is Canada. The proposition concerns the imports of the country and setting it with 20% increase in tariff for softwood lumber.
The New Duty on Canadian Softwood Lumber Might Be a Response to U.S. Lumber Producers
Wilbur Ross, the Commerce Secretary, has just made public a new 20% duty on imports of Canadian softwood lumber. America is already relying heavily on this industry branch that springs in Canada. The value of the demand can attain an amount of even $5.66 billion over an entire year. The acquired supply contributes greatly to improving and constructing new infrastructure for the United States.
This recent decision wasn’t without roots in the culture of the country. The American lumber producers signed a petition condemning the Canadian lumber system. They disagree with the government as it asks charges for logging on the lands that Canada owns. The US tried to prove that Canada practices unfair pricing activities through NAFTA and World Trade Organization. However, the country failed to support its views with evidence beyond reasonable doubt.
Taking these attempts charged at the Canadian system into consideration, the recent decision seems just a way to indulge the American lumber producers. On the other hand, this might be a pretext that masks Trump’s conviction that Canada is responsible for the trade deficit that the U.S. is going through for some time now. He also pointed at Japan, China, Mexico, Germany, and South Korea for the issues with the American economy.
Canada Found the Decision Unfair
However, Canada did not hesitate to give its own view about this step. The country called the 20% tariff on softwood lumber as a repressive measure that holds no fair reasoning. Chrystia Freeland, the Foreign Minister, as well as Jim Carr, the Natural Resources Minister, stated similar views. They are both of the opinion that this new direction would impair the activity for both parties. Moreover, the tariff will also facilitate an unreasonable increase in U.S. home prices.
After Trump had announced the decision, the Canadian dollar showed its worst performance in the last four months. The currency dropped 0.40% to C$1.356, and the Canadian coin ended up trading at 73.8 U.S. cents.
Image source: 1