After bitching about the unfair trade policies of China, Mexico, Germany, and Japan for years, Trump finally decided to act.
His first target is Canada.
The dispute centers on Canadian provinces that have been allegedly allowing loggers to cut down trees at reduced rates and sell them at low prices
The Wall Street Journal reports Trump Administration Plans to Impose 20% Tariff on Canadian Softwood-Lumber Imports
The Trump administration is taking retaliatory action against Canada over a decades-old trade dispute, moving to impose a 20% tariff on softwood lumber that is typically used to build single-family homes, Commerce Secretary Wilbur Ross said Monday in an interview.
Mr. Ross said the tariff would be applied retroactively and imposed on Canadian exports to the U.S. of about $5 billion a year. He said the dispute centers on Canadian provinces that have been allegedly allowing loggers to cut trees down at improperly subsidized costs and sell them at lower prices.
The decision is preliminary and the Commerce Department will need to make a final determination. After that, the U.S. International Trade Commission will also need to find that the U.S. industry has suffered injury before any tariff is levied. But even a preliminary decision has immediate real-world consequences, by discouraging importers from buying lumber from Canada.
The Canadian government said late Monday it “disagrees strongly” with the Commerce Department’s decision, arguing the reasoning was based on “baseless and unfounded” allegations from the U.S. lumber industry.
The U.S. lumber industry filed a complaint last fall to the Commerce Department, alleging that Canadian lumber is unfairly dumped—or sold at less than market value—into the U.S. market and that Canada heavily subsidizes its timber industry by offering Pacific Coast producers access to wood from government-owned land at below-market prices.
The prospect of U.S. duties on Canadian lumber imports has roiled prices so far this year. Lumber futures rose more than 25% in the early months of 2017, peaking at their highest point in over 12 years. The U.S. ran a trade deficit of $5.28 billion in 2016 with Canada on products from sawmills, which captures softwood lumber—or the product at the heart of the U.S.-Canadian dispute.
Lumber Futures
Trade Idiocy
Daniel J Hannan, a member of the UK parliament gets it. Most don’t.
To protect a few thousand lumber industry jobs, the entire homebuilding industry will pay more for lumber. There will be a net loss in jobs as a result of this nonsense.
Ironically, not even lumber industry jobs will be saved if the action causes a housing slowdown.
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Mike “Mish” Shedlock
It’s ironic because as a builder, Trump was very sensitive to the price of building materials and the economics of putting up real estate. In New York the move to glass was partially due to the organized crime influence and pricing of the New York cement business.
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Since the 2009 recession, PPG has shut down a major portion of its glass production and only restarted a small fraction to come partially up to supply demands. Glass now comprises about 25% of the cost of a multi-story building and the is now the most common reason for delays in building schedules.
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Yup, Trump Tower has a hell of a lot of two by fours.
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When the US wins this case, will retractions be in order? How about what Trump tweeted about US Dairy Farmers? Here is an opinion piece from the Canadian Financial Post. Canada’s Supply Management Board has restricted imports from US in order to increase costs to Canadian final product producers so they could raise prices more than the increase in costs – to Canadian consumers.
We are against this kind of thing.
http://bit.ly/2oH16Bi
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The US won’t win this case. This will be the fifth time in 30 years that the US lumber industry has tried this and the US has lost all four previous cases at the WTO. In the meantime lumber prices will go up and American consumers will pay more.
This is the definition of insanity: keep trying the same thing but expect a different result.
Moronic.
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But Wilbur Ross has friends that bought heavily leveraged futures that needs to be kept in the money. Since, if those guys’ starts worrying that the government don’t have their backs, they won’t continue to pile leverage into a record PE stock market anymore. And as every drone has been told to memorize, propping up the stock market is what is important in The United Banks of Dystopia.
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OK, so to remedy this, Canada should be forced to sell off all the government land to private interests who have to pay the banks interest on the money borrowed to buy the previously free land (which was not produced by anybody but God), and these private interest would have to charge more to access the land. Besides not being in anybody’s interest (except the banks and financialization), the temerity of trying to force American political culture on Canadians who have decided not to auction off the land, is mind-boggling. Canada is not subsidizing this lumber, they just charge less to access the land than do private interests in the States.
As for the milk, Canadians do not want to open their borders to milk that has been produced by giving the cattle anti-biotics routinely (a very bad practice that insures there will be infectious diseases in our future to which we have no answer) and that are fed hormones and GMO crops. That is what sovereignty means. The marketing boards are not unfair competition, they are a mechanism to avoid the destructive hog cycle which always afflicts agriculture. [Americans have more than enough farming subsidies and support of their own.] The mechanism may not have everybody’s support, but the goal does. It has nothing to do with the Canadian government subsidizing the milk and dumping it for export in US markets.
Trump is being a moron, and picking on a country which has been a good ally and resembles the US most closely. Traditionally Canada and the US have solved problems by talking and compromise. If this is being friends, who needs enemies.
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Please define
“a country which has been a good ally”
Tks
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Hear,Hear!!!
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Another good one from the NP on the topiv
http://www.nationalpost.com/m/wp/full-comment/blog.html?b=news.nationalpost.com/full-comment/national-post-view-after-a-nuclear-war-only-cockroaches-and-canadian-supply-management-would-be-left-standing
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C’mon Mish, he’s just trying to “save the planet”. You DO love the planet, don’t you?!?!
Get on board, man. Help Donald help the little trees. Sierra Club, where are you?…….
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“In another step toward WORLD-WIDE TRADE WAR, the International Monetary Fund over the weekend became the second major global economic organisation to BACK AWAY from a commitment to “RESIST all forms of PROTECTIONISM.”
“…the ‘FREE TRADE’ commitment was REMOVED as a result of pressure from the Trump administration, in line with the White House’s ‘America First’ agenda.”
Selected quotes from “IMF meeting signals descent into global trade war”
http://www.wsws.org/en/articles/2017/04/24/pers-a24.html
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Let’s see…
Trade talks on Canada’s unfair trade practices with dairy fell through.
Canada thought they were still dealing with the weak obama admin.
Trumps then slaps them in the head.
Love it.
The world has changed. There are fools who still cling to the way it was…
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The $5 billion retroactive fine is sweet. If they don’t pay the fine then they stop shipping lumber and go out of business. That’s a nice whack up side the head.
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You’re cheering for higher lumber prices in the US? Morons.
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Well, let’s see. If we buy only the cheapest and that ultimately means ALL production is imported, WHERE will YOU work?
The US has put heavy duties on imported lumber from South America to “save the rainforests” for years, driving up mahogany costs to the point that you could buy imported mahogany furniture cheaper that we could buy the wood. I guess no one cared about US furniture manufacturers or higher costs as long as we are saving the planet. Our jobs appear to be pretty low on our priority list….But then why would it when we can borrow what we need or simply go begging to our government who will simply borrow even more or just raise taxes on the remaining foolish few still working.
When cheap consumer goods are more important than having a job, we know the progressive indoctrination is fully in control, and we are all doomed.
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Ha! Make Canada pay for the wall!
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That’s a nice sentiment. Piss all over your closest neighbor, ally and trading partner. Then cozy up with Russia and China. What is wrong with you Americans? You seem to take pleasure in screwing other countries. No wonder you have such a poor reputation worldwide!
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NAFTA pissed all over Americans.
Canadians leaders openly disrespect President Trump.
Canada basically has no military and depends on America to do the heavy lifting.
You just loved the world under obama. Who wouldn’t?
You got everything you wanted and gave up nothing.
The world is a scary and hard place.
Maybe you should not bite the hand that feeds you.
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Guys like 2banana don’t care if everyone in the whole world hates America. If anything, to them it’s a sign of success. These guys live in small rural places where the Talaban would be at home – in states like Oklahoma and North Dakota and Mississippi. They have no future and if they were in the Middle East they would all be ISIS followers trying to behead people.
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C’mon! Don’t insult the Taliban by this kind of association. The Taliban don’t impose Mickey Mouse tariffs. Don’t print money. Don’t ban citizens from arming themselves. Don’t do much of anything at all in an organized manner. And do abide by at least some form of constitution, even if it isn’t the exact one I would have chosen.
But that’s just details. Compared to the junta we are stuck with, those guys are positively Jeffersonian.
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We have no friends, no allies, beyond those we apparently are willing to pay for. The US is accused of protectionism when we attempt to respond at a level one tenth that imposed upon us by our “friends”. Ship something to Canada and see what happens
Ship something to China or about anyplace else on the planet. They ALL tariff our goods, while we, like idiots charge almost none while taxing OUR corporations, OUR labor, higher than anywhere else on the planet. Geniuses we are, and WONDER why the rest of the world is upset. We are waking up, doing onto others as they do to us. Make them pay to export….Just like we do and make them pay for defense rather that we footing the bill forever.
SORRY if that offends some delicate sensibilities who desperately need others love at any cost or simply insist on the cheapest price no matter who’s life it destroys. Probably just some “Taliban” tube in Oklahoma who can no longer find a job and foolishly refuses to jettison his pride for government dependency.
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Sounds like the Canadian Gov’t is basically giving the trees to the lumber Co’s and they can undercut the US lumber Co’s. So….is THAT a problem?
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Undercut, love than pun!
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And Wilbur Ross and his New York bankster buddies, are of course the final arbiters of what is the proper “market price” for a tree, in a country that has more trees than New York has semi literate, self promoting bankster billionaires..
On a personal note, I look set to make out like a Robber Baron, from all the bets I made with members of the “thiiiiingz are diiiiferent thiiiiiiz tiiime” mob; wrt Trump breaking the trend of President X being worse than President X-1, which has persisted unabated since Jefferson.
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As Wilbur Ross says lumber costs are 7% of the cost of building a house. A 20% tariff/penalty adds an immaterial 1.4% to the cost of building a house.
The Canadian government sells trees on government land to logging companies at below market prices. This is clearly a violation of trade agreement/law.
An equivalent would be for the US government to sell prison labor to logging companies at below market rates. US government has a surplus of prison labor. Canadian government has a surplus of trees.
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The US loses this case every time they try it. Crony capitalism. The politicians are in the pocket of the lumber industry at the expense of the homebuilding and renovations industries.
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This issue has been ruled in favor of the US industry ever since the Carter Administration.
An equivalent for the US would be for the Forest Service to grant timber rights to US lumber companies over vast tracks of federal Forest and offer that at stumpage prices that are way below the market. Then the US industry would be just like Canada. Not only does Canadian firms get great deals on blocks of timber, they get great tax incentives and labor incentives for creating jobs in the remote parts of Canada (more government subsidies).
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Wrong. Four times this has gone to the WTO. Four times the US has lost. Get your facts straight. The real loser though is the American consumer. Way to screw the people who voted for you. Meet the new boss. Same as the old boss.
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So, that duty that was collected for years that expired in October of 2015 (based on lumber market prices and could be anywhere from 0 to 15%) was based on what?
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If the full tariff were imposed, it would add $3,600 to the cost of a new house, which is indeed a small fraction of the total price. But a $3.6k price increase would also eliminate 150,000 potential buyers. Canada has a trade delegation shopping their sustainable ecologically-grown lumber to other markets such as China, Japan, Vietnam, etc. Unfortunately, tariff money collected from USA lumber buyers does not go into the USA Treasury to offset the USA budget deficit. Rather, the rules of the game call for the tariff money to go directly into the pockets of the USA forest product companies who initiated the complaint. A sweet deal for USA forest companies. Money for Nothing. Mainstream Media Propaganda Whores are notably incomplete in their reporting, leaving out many salient facts. But MSM Propaganda Whores will probably find a sawmill somewhere and claim it is preserving 3-5 jobs some place, and claim it as a big victory.
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The American LumberJacks…are saying…that’s OK 👍
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‘MERIKA, YOU’VE BEEN TRUMPED !!!
By the Flip-Flopper In Chief
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Come on Mish, you quote that cheap US milk is good for Canadians, cheap Canadian lumber good for Americans…sure, that makes sense, until you look at the reality and details of what is really going on.
Canadian lumber is falsely “cheap”, via protectionist measures…OK, if Canada wants to subsidize American’s home building/construction, fine, but it is those same ideals which are barring the sale of US milk to Canadians.
Ending the exploitation of American limp wristed approach to foreign relations is what is at stake here. Our markets are the finest in the world, and EVERY COUNTRY wants in to them. Fine, but don’t allow them to make us pay for the subsidies in their country, with higher tariffs on our exports. You want into our markets, then we get access to yours. Fair is fair.
Otherwise, we devolve into solely a consumer economy, and that is unsustainable. Who would buy your fantasy driverless cars and airplanes, if no one has jobs (other than shuffling papers for the government) in America?
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Who would buy your fantasy driverless cars and airplanes, if no one has jobs (other than shuffling papers for the government) in America?
The question would answer itself if you thought for one second instead of spewing nonsense.
If no one could buy the stuff, then prices would have to drop until they could.
Falling prices contribute to rising standards of living
This idea that every job will vanish is absurd
But if it does, we won’t need humans
By the way, I would get rid of the government shufflers
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Mexican peso tanked when Trumpf started talking about import duties, pretty much nullified what the effect would have been, maybe similar will happen to Canadian dollar eh, although it’s already tanked.
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Build the wall, Mr. Trump! We’ve had enough of these Canadian thugs coming down here, raping our women, selling drugs to our children and under-cutting our lumber prices!
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Canada is letting in tens of thousands of muslims…
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Isn’t that their business? What’s it to you? Could you even find Canada on a map?
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It surprised me that he pounced on Canada first.
My guess is that he’s had a long-standing dispute with Canada over some business dealings and now it’s payback time.
My guess might be off by a country mile. But I didn’t hear him mention Canada even one time on the campaign trail when it came to an unbalanced trade relationship.
Weird.
Now I read that Trump has backed off on demanding the new government budget include money for the wall on the US-Mexico border.
I’m losing faith in Trump fast. And I won’t hesitate to say it. I’m not a snowflake like Hillary supporters who backed her up 100% despite her criminal and unethical behaviors. No one is too big for my criticism. I was never much of a team player.
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If the Olympics held a backpedaling race, DJT would win going away.
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Everything is negotiable with Trump. He asks for everything. He gets something. Next time he’ll ask for everything again and get something else. Keep the faith.
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We didn’t pounce on Canada first, they pounced on us over milk prices. Our milk is heavily subsidized. A gallon of milk costs between 2.19 and 2.50 because of subsities… without the subsidies it would cost around 7.00 – 8.00 dollars a gallon. As a result, the Canadians slapped a 300% tariff on our milk and i don’t blame them a bit. Also, look at the bakery business that has gone to Mexico because of sugar #16 vs sugar #11 price differences. We have some big incontingencies to sort out too.
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Actually, Trump pounced on Canada because it was the easiest target. Unlike Mexico, Canada cannot unleash a torrent of Central American migrants across its border. China, like Mexico, also has many more ways to retaliate than Canada. Bullies always do best picking fights against weaker opponents. A propaganda victory of sorts for Trump. Next it will be steels turn, and those companies will pocket another round of tariff money. Initiating trade complaints and collecting tariffs (booty) is a better business (100%+ margins) than actually producing something. Canada will sell more trees to China, Japan, et al. and keep their dairy farmers protected. Trump, a protectionist himself, understands this and would do the same if he was on the Canadian side of the border. But Wisconsin and NY dairy farmers will be happy (Schumer is happy). Just a rerun of previous lumber, steel and dairy tariffs, like under Bush II. Hillary would have done the same on this one. A good distraction event (from budget sellouts like continued Obamacare subsidies).
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this wouldn’t happen if Ted Cruz was our first canadian president!
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“Lumber futures rose more than 25% in the early months of 2017, peaking at their highest point in over 12 years.”
…
Seems a bit excessive even allowing for the Trump Reflation raising all boats … now if I were a tad cynical I might think all the ex Goldman Sachsers working in The Administration got a bit of a heads up and let the mother ship know.
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As mentioned, this has been a dispute for decades. There was a duty system in place that expired during the Obama years. Canada took the position to not re-negotiate a new system and the US Feds let it go. The US Wood Products Industry took it on and put together their case. In the mean time, the Canadians ramped exports into the US. Now that the Commerce Department has issued this ruling, the Canadians will come to the table to Negotiate a final deal. Trump had Zero to do with this ~ it has been in the works for over a year. I’m for fair trade, but that means Government subsidies need to be removed or you must have some type of protection. Or, the US Forest Service can just give cutting rights to US lumber companies at greatly reduced prices to open market transactions and then the US industry would be on an even playing field (Sarcasm: I do not support that)..
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Obama unilaterally pounded Canada’s oil industry, shunned Canada & instead embraced the Arabs of all people. Canadians were hurt & insulted.
As you note, America has identified numerous trade targets but now it’s Trump who unilaterally selects Canada and our forest industry this time.
Why does America always lash out at Canada? We’re harmless.
Furthermore, we supply America with natural resources that make America great.
Having a bully for a neighbor is not healthy. Can a country have PTSD?
________________________________
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Canadian softwood comes from government owned forests. U.S. softwood from private land. The Canadian government can sell those trees for whatever they want. This is a resource and governments anywhere can sell resources for whatever price they want. This is not a manufactured product with fixed costs, etc. Tough luck to the private forest owners of the U.S. just like tough luck to private forest owners in Canada. With Canadian softwood being so large, maybe the Canadian price IS the world rate and private land owners just need to lower their costs.
Canadian food (milk) doesn’t have Bovine Growth Hormone in it and is comparable in price to organic milk in the U.S. As a Canadian, I won’t drink U.S. milk. Keep your factory farms and poison to yourself. The worst food that I ever saw or tasted was in Florida. That produce wouldn’t even be displayed in a discount supermarket in Canada. It was also tasteless. “American cheese”? No self-respecting person eats that fake orange food. My grilled cheese sandwiches contain proper cheddar.
Getting really sick of the U.S. bully. …everywhere in the world. I travel in many countries and the U.S. is despised. There will be no sympathy when the U.S. collapses. …and it will someday.
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Things are getting pretty ugly when Canadian express such deep hatred.
I fear the day when America needs help from another nation and we don’t have money to buy them off.
What are we going to do when they refuse help? Blow them up?
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what nobody mentioned? Lumber futures halted from what I read at the 10 dollar limit down yesterday afternoon. The U S steel released nightmare results and cut guidance by 50 pct for end of this year. Enough said. Time to stop playing games and go after China
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I think because Trump has had no success accomplishing anything inside the U.S., has now focused his attention to what he can screw around with in the world. And there is no easier target than my lame duck government headed by Prime Minister Valiant (Trudeau).
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we have tons of trees in canada (it’s a big country) so the cost of goods is low. we can sell them to you cheap to keep costs down for your builders and home-buyers. in return we buy your technology and HBO cause it’s better (generally) than what we make. that’s the whole essence of trade. you nick us where we have a comparative advantage, we’ll do the same to you. the only victors are the posing politicians smirking while signing useless taxation documents masking as tariffs.
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