Commerce Department Orders 20 Percent Tariff On Canadian Lumber Imports

The Commerce Department has called for a 20 percent tariff on Canadian lumber imports. It's the latest sign of the Trump administration's more aggressive stance on trade enforcement.

ARI SHAPIRO, HOST:

The Trump administration is taking a hard line on softwood lumber. The Commerce Department has ordered roughly a billion dollars' worth of tariffs on lumber imported from Canada. The tariffs could be the opening salvo in a wider trade dispute. President Trump told reporters this afternoon he's not afraid of that.

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PRESIDENT DONALD TRUMP: Everyone thinks of Canada as being wonderful, and so do I. I love Canada. But they've outsmarted our politicians for many years.

SHAPIRO: Along with lumber, Trump has been complaining about Canada's treatment of U.S. dairy farmers. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Softwood lumber is used primarily in building houses, and about a third of the lumber used in this country comes from Canada. Commerce Secretary Wilbur Ross says Canadian producers have been selling that lumber at artificially low prices, creating unfair competition for domestic loggers and mills. Ross announced a 20 percent tariff on lumber imports from Canada.

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WILBUR ROSS: They are a close ally. They're an import ally. They're generally a good neighbor. That doesn't mean they don't have to play by the rules.

HORSLEY: Ross admits the tariff could raise lumber prices somewhat, but he expects only a modest effect on home prices, which are largely driven by land values. Matthew Slaughter, dean of the Tuck Business School at Dartmouth, says this is a natural trade target for the Trump administration. Softwood lumber has been a splinter in U.S.-Canadian relations for decades.

MATTHEW SLAUGHTER: If they are looking to at least in symbol communicate to American voters that they're tough on trade, lumber is an easy industry to look to because there's such a history - many, many years of trade disputes between the United States and Canada.

HORSLEY: The U.S. argues Canada unfairly subsidizes exports by charging lumber companies artificially low fees to harvest on government land. Canada calls that charge baseless and unfounded. Slaughter, who is a former economic adviser to George W. Bush, says this kind of disagreement is common in trade disputes.

SLAUGHTER: When a country is very good at producing something and it has low prices, is that just because they're inherently very good at it because of management and technology and the endowments of land and other resources, or is something unfair?

HORSLEY: Trump often paints the U.S. as a victim of unfair competition. Here he is last week during a visit to Wisconsin.

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TRUMP: In Canada, some very unfair things have happened to our dairy farmers.

HORSLEY: Dairy farmers in Wisconsin and elsewhere complain they've been abruptly and unfairly shut out of the Canadian milk market. Canada disagrees, arguing that American farmers are simply producing too much milk. Slaughter says foreign countries have often eyed U.S. farm exports with the same kind of suspicion that the U.S. has turned on Canadian lumber.

SLAUGHTER: There may be earnest reasons why we want to support the incomes and well-being of American farmers, but doing it through production support as we've done historically distorts markets in the ways that other countries look at and not unreasonably say, hey, this doesn't seem fair to us.

HORSLEY: As it happens, Trump had a meeting this afternoon with more than a dozen farmers, some of whom are keenly interested in boosting U.S. agricultural exports. Ray Starling is a special assistant to the president for agricultural trade.

RAY STARLING: We obviously grow more food than we can eat in the United States, so our real potential for economic growth is either talking you all into eating more or to finding new markets for our products overseas.

HORSLEY: The U.S. already has a trade surplus in farm products, and farmers are looking for more. Some pork producers were disappointed with the collapse of the Asia-Pacific trade deal that might have boosted exports. Likewise, corn growers are worried that a big NAFTA fight could cut off their market in Mexico.

In recent decades, U.S. presidents have tended to focus most of their trade energy on prying open foreign markets to U.S. exports rather than safeguarding the domestic market against imports. Slaughter says so far, the Trump administration appears to be taking the opposite tack.

SLAUGHTER: This administration is focusing much more on building walls - literally and metaphorically - than building bridges.

HORSLEY: What's not yet clear is whether the newly announced lumber tariffs are an isolated action or the first plank in a new wall of trade protectionism. Scott Horsley, NPR News, the White House.

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