Breadcrumb Trail left
An increase in wood prices would refuel inflation, reduce an available income and cancel the consumer -oriented economy of the USA
Published on January 27, 2025 • Read for 3 minutes
You can save this article by registering here for free. Or register if you have an account.
Export tax on wood would immediately increase the costs of building the home in the USA and make the risk of a trade war with Canada clear to American consumers, writes Jenspeter Garynin. Photo by Mike Hensen/The London Free Press files
Article content
Trump's threats to Canada – imposing Destroy tariffs in Canadian goods or make Canada the 51st state – It may be repulsive, but unfortunately they are very real. While a complete takeover of Canada is probably just rattling saber, the introduction of tariffs is a real problem. This is a time for aggressive leadership. The political decision-makers, who focus on “win-wins” or reactive strategies, have to rethink their approach to effectively represent Canada.
Advertising 2
This display has not yet loaded, but your article will continue below.
This content is only reserved for subscribers
Subscribe now to read the latest news in your city and all over Canada.
- Exclusive articles by Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.
- Daily content of Financial Times, the world's leading global business publication.
- Unlimited online access to read items from Financial Post, National Post and 15 news sites across Canada with an account.
- National Post Epaper, an electronic replica of the print output to see, divide and comment on each device.
- Daily puzzles, including the New York Times crossword.
Subscribe to more items unlock more items
Subscribe now to read the latest news in your city and all over Canada.
- Exclusive articles by Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.
- Daily content of Financial Times, the world's leading global business publication.
- Unlimited online access to read items from Financial Post, National Post and 15 news sites across Canada with an account.
- National Post Epaper, an electronic replica of the print output to see, divide and comment on each device.
- Daily puzzles, including the New York Times crossword.
Register / register to unlock more items
Create an account or register to continue your reading experience.
- Access to articles from all over Canada with an account.
- Share your thoughts and join the conversation in the comments.
- Enjoy additional items per month.
- Get E -Mail updates from your preferred authors.
This article is free to read the register to unlock.
Create an account or register to continue your reading experience.
- Access to articles from all over Canada with an account
- Share your thoughts and join the conversation in the comments
- Enjoy additional items per month
- Get e -mail updates from your preferred authors
Register or create an account
or
Article content
Article content
Article content
Commercial negotiators have to focus on an important fact: Canada produces many products and services that the United States depends on. Canadian goods create an enormous “consumer surplus” for Americans, which may be lost if the price of these goods increases. The 25 percent tariff threats are concerned for Canadians, but they are equally alarming for those in the USA that rely on Canadian products.
Canada enables a quarter of the US wood needs and gives it a strong lever. Lumber is a main entry in the US home construction, which is a core component of the US economy. The real estate market is often referred to as the main indicator of the overall strength or weakness of the American economy. Economists understand that a significant increase in wood prices will increase the costs for the construction and renovation of houses. It is no surprise that the US National Association of Home Builders protests every time when our two countries negotiate the soft wood wood agreement and are directed to Canadian wood.
A heavy increase in pattern prices would do inflation and reduce the available income, which affects the consumer -oriented economy. Timing for tariffs on wood could not be worse for the United States, with the spring building season soon approaching. US wood mills are already working on the supply side near capacity, and the import of softwood from other regions is expensive. In short, even if the Canadian wood prices doubled (or even quadrupled, as in the past), US consumers would still bear the higher costs – albeit reluctantly.
Top stories
Thank you for signing up!
Article content
Advertising 3
This display has not yet loaded, but your article will continue below.
Article content
In the World Economic Forum, President Trump explained last week: “We don't need your wood because we have our own forests.” Theoretically, this is true: US forests could meet domestic demand. In 2024, the southeastern USA received almost twice as much wood as Canada, especially because of the productive south -yellow pine plantation forests in the region. Add the unused state forests of Washington, Oregon and Idaho, and self -sufficiency becomes a plausible goal. The harvest from public forests, most of which are currently protected, would cause violent public counter reactions, conflict with the environmental protection law and conflict with the interests of both large and small private Timberland owners. Even if Trump would push for an increased harvest, the United States lacks logging and mill capacity to process the trees in wood. While Trump's statement has a certain truth, the threat remains unrealistic.
The following can do the following: The US wood prices were an average of 400 US dollars per thousand board feugs (MBF) in the first half of January. Canada should raise an export tax of 800 US dollars per MBF, which effectively doubles the price. This step would immediately increase the wooden costs in the United States and make the risks of a trade war with Canada clear to American consumers.
Advertising 4
This display has not yet loaded, but your article will continue below.
Article content
The Canadian forest product industry will probably be the first to oppose this proposal. However, there is a simple solution: The Canadian government should also say that it will redistribute the income from export tax back into Canadian wood outfireers who undoubtedly appreciate that they have received more than twice the beginning of this month. Imagine that the Canadian government sets a price like a monopoly that collects the tax of the US importer and redistributes the income to Canadian companies.
Recommended by editorial
-
How Trump's first week re -hit jobs
-
Canada should urge Usmca to negotiate early
-
Our strategy for dealing with Trump must be a negotiation
Why has the Canadian government not yet? We should have followed this approach every time the United States imposed or threatened to impose or forced Canadian softwood, but we did not do it-especially because Canadian politicians hesitated the relationships between the USA and Canadian relations annoy. Now the boat rocks and it is time for a new tour to take forward.
Jenspeter Barynin is the former executive of the Ministry of Natural Resources in Ontario, Vice President of Timber at Fastmarkets and Teaching Fellow at Harvard University. He is currently chief economist at Vivi Economics.
Place a bookmark on our website and support our journalism: Don't miss the business news you need to know. Add Financialpost.com to your bookmarks and register for our newsletter.
Article content
Share this article further in your social network