Wood, Jobs And Canada

REUTERS/Carlos Barria

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Millions of Europeans sailed across the Atlantic to find and work the gigantic forests that covered millions of acres of America and Canada. Wood and masonry were the very foundations of Western Civilization.

Wood – lumber — is a basic and very important ingredient in our civilization’s climb from caves and mud huts. Millions of acres of American trees have been cut down to build the country, city by city, suburb by suburb; millions of acres of forest still exist in the Lower 48 states, more, however, exist in Canada.

American lumber interests employ 53,000 Americans. In an effort to help those 53,000 Americans, President Donald J. Trump has followed Presidents Bush and Clinton and slapped a 20 percent tariff on “soft wood” products from Canada. The allegation is that Canadian lumber for export is subsidized by the Canadian government. That claim has been made before and twice international adjudication has proven the claim wrong.

What we have is a situation where American lumber producers would rather not supply American needs and sell timber/lumber to Japan and China, both are willing to pay premium prices for American lumber. Because of this export the U.S. does not supply enough lumber to American construction. We import 33 percent of all lumber used in construction and 95 of that is from Canada. Thus, the issue is fictitious.

Unfortunately for American taxpayers and homebuyers the proposed tariff will – according to the National Association of Home Builders – raise the price of lumber even more than it has since January without a tariff. The 20 percent tariff will cost 8,421 American jobs and a loss of $598.3 million in wages and salaries and a loss of $350.2 in taxes, fees and other government revenue.

We are starting to see those effects since January 1 without a tariff because lumber prices have naturally increased 22 percent in three months. That increase has caused new homes to cost $3600 more than they would have before price increases. Adding another 20 percent tariff will spike lumber prices higher.

For every $1000 increase in residential unit price, 150,000 fewer purchase customers can qualify for the loan necessary to buy the new home. Thus, 540,000 potential home owners no longer qualify for a mortgage that did in December, 2016.

So says Granger MacDonald, Chairman of the National Home Builders.

If these numbers are correct, why in the world is President Trump laying a 20 percent tariff on Canadian lumber?     On the very day he announced the lumber tariff, the Administration leaked that a draft informal notice of withdrawal from the North American Free Trade Agreement (NAFTA) was circulating through agencies. What?

Most observers suspect that the 6-month notice will be sent to Congress and NAFTA partners Mexico and Canada to stimulate changes in the agreement that President Trump has labeled the “worst” trade agreement in American history. He claims that Mexico is ripping off the United States in trade and has encouraged American jobs to leave the United States for reestablishment in Mexico.

If President Trump is not aware that 14 million American jobs are jobs in NAFTA trade with Canada and Mexico, according to the U.S. Chamber of Commerce, let this be his notice.

Would he endanger millions of jobs as a negotiating ploy? Subtract oil/energy from Canadian exports to the U.S. and we have a trade surplus with Canada. Subtract cars made in Mexico and exported to the United States and we have a trade surplus with Mexico. Crying about jobs that have moved to Mexico in past years is misdirection. Most jobs that have been lost have been to automation, not Mexico.

Over a million people-a-day legally cross the Mexican border. A billion and half dollars in trade crosses the Mexican border in both directions every day of the 365 day year. Mexican and American trucks cross the border every 25 seconds of the trading day between the U.S. and Mexico.

American NAFTA trade with Mexico is huge; millions of Americans work in trade with our NAFTA partners – almost a trillion dollars in trade among the three NAFTA partners a year makes each American, Mexican and Canadian citizen wealthier than they would otherwise be.

Picture a trillion dollar bills zooming around the three countries – that Mr. President is NAFTA trade-a-year. NAFTA is 480 million people pulling in the same direction. The U.S., Canada and Mexico – NAFTA — make up the largest, strongest, most democratic energy producer in the world.

NAFTA can be improved certainly, it is a quarter century old. It can be made better. It is a deal waiting to be made, Mr. President. Lumber from Canada is but a tiny sliver of NAFTA, that issue is but a tiny issue that can solved with a phone call. Just do it.   

Contreras is the author of THE MEXICAN BORDER: IMMIGRATION, WAR AND A TRILLION DOLLARS IN TRADE and MURDER IN THE MOUNTAINS: WAR CRIME AT KHOJALY both published by Floricanto Press. He also formerly wrote for the New American News Service of the New York Times Syndicate.