Canadian Softwood Tariffs: Who Benefits, Who Pays More?
Both the U.S. and Canada produce lumber products and have had disagreements over lumber since the 1800s. We have traded wood products in both directions with and without tariffs. Previous administrations have implemented duties and tariffs, NAFTA plays a role too, and the World Trade Organization (WTO) has ruled “no damages” to the U.S. in previous legal challenges.
Both countries also control and manage vast timberlands provincially, federally and privately held. Our federal land utilizations were set up by President Roosevelt; one being our national forestlands for all to use. The other, equal amounts of federal land were set aside for preservation through the National Parks system. The timberland management of the National Forests helped us out of the Great Depression by utilizing its forestlands, creating jobs and allowing smaller independent companies the ability to compete against the largest timberland companies. Both the National Forest and the National Parks were managed separately because of the two differing philosophies up until the late 1980s, when they came under one management. The U.S. has governmentally, ecologically and through various lobbyists chosen to restrict the originally intended National Forest timberland usages. Canada still maintains multiusage for their provincial forests today.
Lumber prices have always been established by the free trade mechanisms of supply and demand. The pricing is set by costs to establish a bottom-line profit. The costs are based off of specific species availability (framing lumber, for the most part), reforestation, harvesting, transportation, manufacturing and distribution. These costs are also affected by each country’s geographical regions, yearly seasons, availability of specific species, harvestable trees available, ecological restrictions, governmental permits process and by the engineered natural qualities of each specific species. The end goal is to meet and exceed established specific building code usages along with architectural specifications.
Greatly adding to the costs, which is outside of the lumber industry, is each country’s monetary dollar value and banking systems controls. For example, today (5/12/2017), 1 US$ = $1.37 CA$. (In 1979, 1 US$ = $1.26 CA$.) These two monetary dollar values have been at par in recent times too, in which case the Canadian labor costs are higher per manhour than the U.S.
Both countries’ central governments in Washington D.C. and Ottawa implement national policies and are both influenced by political, public and private lobbyists along with governmental agencies’ value judgments & interpretations. This sometimes results in disjointed effects to the differing regional needs of all industries. Even the differences of governmental fiscal accounting versus certified public accounting principles have to be considered.
U.S. Exports, Too
We must look very seriously at log exports from the U.S., too. Every shipload of logs that leaves our western ports is exporting made-in-America jobs. An average small ship will carry 5 to 6 million board feet of logs (Port of Olympia, WA figures). That is a log circumference board footage log scale as opposed to square or rectangle lumber board footage. Each logging truck will carry in Douglas fir logs that equal around 3,500 to 3,800 board feet. That equates to over 1,316 truckloads per ship or to a local mill. The average independent sawmill requires around 18 to 20 truckloads of logs to operate one day’s shifts, usually employing at least 30 to 40 people and producing a finished product that is “Made in America” and exportable. The amount of logs on one ship would keep one U.S. mill producing for about 70 days.
When you multiply the number of shiploads being exported from all western ports, you get over 850 mmbf of logs (U.S. Government figures for 2016). The logs exported would support 61 U.S. sawmills, employing well over 3,600 employees, for one year. Those logs would create more jobs and product available for both the domestic markets and foreign markets while strengthening our own economy and local communities.
The amount of exported logs from just the Western U.S. would make up more than the so-called damages the U.S. Lumber Coalition is claiming. Canada only supplies around 30% to 32% of the finished lumber the U.S. consumes. How can a 30-32% supply of imported lumber hurt our sawmills, when the amount of exported logs greatly exceeds that 32%, especially when considering the 37% difference in the value of the U.S. dollar vs. the Canadian dollar?
In closing, I am against the current lumber tariffs as currently implemented.