On Monday, the Trump administration imposed a tariff on Canadian softwood lumber imports after accusing the Canadian government of subsidizing its lumber harvests. Additionally, the Trump administration slapped some specific Canadian firms with tariffs between 3 percent and 24 percent.
The Canadians, as expected, are outraged. “When it comes to defending Canada’s economic interests, we’re going to play hard,” Canada’s Foreign Minister Chrystia Freeland told CNN. Freeland reminded viewers that although Canadians are known for being polite and nice, hockey is the national sport.
As for the Trump administration, they seem to relish the prospect of a trade war with America’s northern neighbor. “We have massive trade deficits. So when we’re the country with the deficits, we have no fear,” President Trump said in remarks to reporters.
Trump relishes a trade war because he appears to suffer from economic illiteracy. In his quest to preserve the livelihoods of American loggers, he’s issued a death sentence for jobs in construction and other fields.
Let’s start with basic Econ 101: foreign countries and foreign businesses don’t pay tariffs. You the consumer pay tariffs. The tariffs are passed down to consumers in the form of higher prices. In this case, the cost of homes is expected to go up, which will mean that fewer homes are built. That means fewer jobs for construction workers and home and construction supply retail workers. Those who work in the construction industry are exactly the sorts of blue-collar voters that Trump appealed to in last year’s election.
We already have an idea how destructive these tariffs will be. The National Association of Home Builders estimates that more than 8,000 jobs will be lost as a result.
It’s also worth noting how Canada supposedly subsidizes its lumber industry. In Canada, timber lands are controlled by provincial governments, whereas in the United States, timber lands are owned by private entities. That means Canadian timber producers are not as subject to the whims of the market as American timber producers are.
At first glance, it seems that Canada is screwing America. But the reality is that Canada shouldn’t be punished for having different land management practices from the U.S. and pursuing their country’s best interests. Surely an administration premised on “America first” and opposition to “globalism” can respect Canada’s sovereign right to manage its resources as it sees fit.
Besides, as Mark Perry of the American Enterprise Institute points out, we should be treating Canada’s cheap lumber as a form of foreign aid. It’s a gift, not a job killer.
To sum up, far from helping the American economy, these tariffs will hurt it. This shouldn’t surprise us from an administration that doesn’t seem to understand basic economics.