The Trump administration has started slapping tariffs on our trading partners. On Tuesday, Commerce Secretary Wilbur Ross announced a tariff on Canadian lumber.
Where that stops, nobody knows.
But we do know where it starts from. At its core, this tariff comes from a deep disrespect for the sovereignty of other nations. It comes from a flippancy about understanding their economic structures, policies and challenges. It comes from the most insidious hypocrisy of hyper-nationalism — the belief that your country’s rules (foreign or domestic) supersede those of anyone else’s.
To understand why this lumber tariff is a demonstration of this disastrous notion, you have to first understand how the Canadian lumber industry works. And then you have to have a little background on how the trade people in the Trump administration have talked about our trading partners in the past.
First, the lumber.
“Another idiotic move by the Trump Administration on trade policy,” Lee Branstetter a professor of economics at Carnegie Mellon told Business Insider. “The dispute has been simmering for a long time, and its roots, if you’ll pardon the arboreal pun, go all the way back to the fundamental nature of land ownership in Western Canada versus land ownership in the US”
US timber lands are mostly privatised. That means logging companies have to pay out to land owners to harvest timber. In Canada, timber lands are controlled by provinces. Those provinces aren’t out to make a profit the same way private land owners are, and as such, Canadian lumber companies don’t have to worry about land owners jacking up prices if timber prices are higher.
In other words, Canadian companies can keep their lumber cheaper because they’re not as subject to the whims of the market. You can complain and whine about this all you want, but this is the structure Canada, a sovereign nation, chose.
And we chose another one — one that makes us less competitive than our neighbour.
This why, as Branstetter said, the dispute has been long simmering, previous administrations haven’t done as much about it. Canada’s cost savings are built into the price of their wood not because they are treating their companies differently from ours on purpose — which is what the World Trade Organisation’s “General Agreement on Tariffs and Trade” — is trying to prevent. It’s because their system is inherently different from ours.
Show some respect
And the problem — where this can start to get us in trouble all over the world — is that the President Donald Trump has shown that he has no respect for the fact that Canada’s economy is just different, and they have the right to be different. Commerce Secretary Wilbur Ross said that this administration would be more about “enforcement” on trade. But the administration should enforce laws, not paranoid delusions and Trump’s particular brand of economic victimhood.
If you’ve been watching the administration you’re probably not surprised that this is happening, though. There have been clues that Trump’s people don’t respect sovereignty the way they should.
The head of the White House’s National Trade Council, Peter Navarro, told the National Association of Business Economists that he believed Germany should renegotiate its trade deals with the United States because (as these people always say) our country is being taken advantage of.
Of course, Germany doesn’t have a single trade deal with the US, the EU does, and as a member nation of the EU Germany must abide by those terms. That is the unique nature of its economic development. As a sovereign nation, it has a right to that. However, Navarro doesn’t have any respect for that.
That delusion was passed right on to Trump too. During his press conference with German Chancellor Angela Merkel, Trump told Merkel and the press that Germany had gotten the better end of the stick in trade deals with the US in the past and that he was looking to rectify that situation.
“The negotiators for Germany have done a far better job than the negotiators for the United States,” he said. “But hopefully we can even it out.”
Again, that’s not how this works. Sovereign nations have the right to any political or economic organisation as they like domestically. As members of the WTO, we have to respect that and them as long as they’re not favouring their own domestic products over ours.
Which brings us to the ridiculous hypocrisy of this entire thing. How can an administration pushing “Buy American, Hire American” complain about another country’s domestic economic sovereignty? Trump’s own trade manifesto calls for other nations to follow our rules and expect retaliation for any measures that “cause or threaten material injury to a domestic industry.”
Oh and one more thing
Jobs. Isn’t that what we’re trying to save here?
“Cheap lumber helps keep the price of house construction in the US relatively low, and a fairly vibrant housing market is one of the few sectors generating jobs for the less educated, blue collar types that are the political base of Trump’s support,” Branstetter pointed out.
“By raising the cost of lumber, Trump will ensure that fewer homes are constructed, and that fewer construction workers are hired. If this new tariff is implemented and stays in place, it is almost certain to destroy more jobs in the construction industry than it will ‘save’ in the timber harvesting industry. “
So there that. This could hurt our own economy. This will upset our neighbour.
And more than that (so much more than that), this shows that the administration is willing to lead with its basest, most disrespectful and delusional notions. This shows a deep disrespect for another country’s national sovereignty.
That’s a slippery slope.
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