Northern wallflower

Negotiation partners take the dance floor

Kerry Knudsen

HOUSING SUPPLIERS IN THE STATES are beginning to whine about tariffs, and not without cause. According to the National Association of Home Builders, tariffs averaging just over 20 percent on Canadian softwood lumber exports to the U.S. are causing market volatility and putting upward pressure on housing prices.

No doubt. This is what tariffs do. While ostensibly a punishment on the sanctioned country, tariffs increase domestic costs by requiring that anybody inside the sanctioning country that cannot do without the sanctioned products has to pay.

Typical of polemic writing throughout history and around the world, the complainants are describing the costs in terms of the real or imagined, direct or indirect victims. In this case, the victims are people affected by wildfires and Hurricane Harvey last year in Texas. According to the California Building Industry Association, the tariffs could add $8,000 to $10,000 to the lumber costs of a single-family home, and another $10,000 could be added for steel products.

For Canadians that export, this means that, while there will certainly be a lessening of demand because of the increase costs of Canadian goods, there will be an offset of 20 to 50 percent, depending on the nature and quantity of materials for those that must buy.

HOWEVER, MOST READERS OF Coverings don’t export goods to the States, and there is no tariff for those of us that provide installation or other services.

For us, there will be a benefit of downward pressure on softwood lumber, plus steel, aluminum and other sanctioned building products, to the extent that those materials play into the overall demand in Canada.

One way to see it is that if downward pressure on softwood products provides a boost to housing starts, then we stand to gain from softwood prices, even if we are only selling LVT and adhesive.

So the tariffs are not good, but they are not altogether bad as far as internal economics in Canada.

A larger question is the cause of the tariffs. We can go back-and-forth all day about who said what to whom, but it seems fairly clear that Trump and Trudeau are about as similar in economic philosophy as – oh – Billy Graham and Satan.

It appears Trudeau believes that to be true, if you look at cap-and-trade, EU compliance, immigration and shoe colour.

If so – if we have a bona fide oil-and-water intransigence (I’d say Mexican standoff, but the illiterate professors and media we endure won’t have it)… intransigence, then Trudeau has only one set of options I can see. Either he negotiates on Trump’s terms, or he knocks Trump out with a right hook. I don’t see capitulation in the cards for either party.

Therefore, Trump threatens tariffs, Trudeau says, “If you do I’ll kick your ass,” and we’re off to the races. Trump appears not to like empty threats.

That does not mean Trudeau is one to be trifled with. According to Esquire, he is, hands-down, the world’s most well-appointed leader, well at home sporting white jeans or cognac cap-toes with matching R2-D2 and C-3PO socks. As one of his fans, who self-identifies as an ex Weight Watchers leader, says, “Justin Trudeau can wear WHATEVER (expletive deleted) he wants to wear. He has intelligence, skill, class, experience, humility, and is a forward thinker.”

There you have it.

AS THE THINKING CLASS would have it, multi-billionaire Trump is lacking class and would do well to attend to fit and finish. The problem is, haute poufferie is not a negotiating term Trump understands, classless or not. And somehow we in the hustings need to try and figure what we will deal with next. Earlier this summer, Trump made a public point of saying negotiations with Mexico are doing well, and “Canada will have to wait.”

As we have noted before, I can’t imagine a long-term benefit in Trump’s mind in applying long-term, damaging sanctions on Canada. We are their biggest market. On the other hand, he may prefer to spend his energy working with people, however, ill-intentioned, that don’t just plain piss him off.

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