Trump angers Canada with additional 25% tariffs on softwood lumber. Maybe Europe will export more?
On February 1, US President Donald Trump announced a blanket 25% tariff on Canadian and Mexican goods imported into the US. (China is lucky, you could almost say, as the new additional tariff on Chinese goods is only 10%). The discontent is on the side of both Canadian and US builders themselves. It is clear that US tariffs on building materials will increase construction costs and hinder housing affordability.
Therefore, the implementation of the new tariffs on February 3rd has been postponed for one month and, before trade wars flare up, negotiations continue.
The 25% tariff on softwood lumber products from Canada would be in addition to the existing 14.5% duty rate, meaning overall effective tariffs on Canadian lumber would rise to nearly 40%.
The National Association of Home Builders (NAHB) has already expressed its dismay at the White House’s move on tariffs, as President Trump on his first day in office ordered all departments and agencies to address the housing affordability crisis by increasing supply and reducing home prices. However, “this move to increase tariffs by 25% on Canadian and Mexican goods will have the opposite effect. More than 70% of two essential materials that homebuilders rely on — softwood lumber and gypsum (used to make drywall) — come from Canada and Mexico, respectively. Tariffs on lumber and other building materials increase construction costs and hinder new home construction, and buyers ultimately pay higher prices for their homes because of these tariffs.” The NAHB urges the administration to reconsider its tariff decision, and promises to continue working with policymakers to remove barriers that make housing more expensive.
Canada, of course, is dissatisfied and is taking a retaliatory step – deciding on 25% import tariffs on many US goods. Canadian Prime Minister Justin Trudeau made such an announcement immediately after Trump, emphasizing that relations between the long-time allies, who share the world's longest land border, are reaching a new low. Among the tariffed goods will be American beer, wine and bourbon, as well as fruits and fruit juices, including orange juice from Trump's homeland of Florida. Canada will also select goods, including clothing, sports equipment and household appliances. Trudeau admitted that it will be difficult for Canadians, but Americans will also suffer from Trump's actions, and are already looking for new cooperation partners. This is reported by Reuters .
Well, let's wait until the beginning of March to find out how productive the negotiations and agreements are.
Sources: www.hahab.org; Reuters
Photo: Pexels: Jonathan Meyer