President Trump on Friday promised to help North Carolina and California rebuild faster. One way to do it would be to drop his threat to impose 25% tariffs on Mexico and Canada that would make disaster recovery slower and more expensive.
The President reiterated his tariff threat in video remarks to the World Economic Forum on Thursday. “We don’t need [Canada] to make our cars. We make a lot of them. We don’t need their lumber because we have our own forests,” he said. “We don’t need their oil and gas, we have more than anybody.”
Mr. Trump is wrong on all three, but we’ll focus on lumber. The U.S. doesn’t produce enough lumber to meet domestic demand and thus imports about a third of the softwood used in home construction, mostly from Canada. Environmental policies restrict logging on public land in the American Northwest. Timber production has shifted to private land in the Southeast, but those forests must be managed so they aren’t over-logged.
American lumber companies say Canada unfairly subsidizes its producers by charging low royalties on timber harvested from government land. Mr. Trump responded in his first term by slapping tariffs on Canadian lumber, which Mr. Biden continued.
Lumber prices are up about 35% from five years ago, which has contributed to higher building costs. As the National Association of Home Builders notes, “the lumber tariffs act as a tax on American builders, home buyers and consumers.” Mr. Trump’s 25% across-the-board tariff would raise the current 14.54% tariff rate to nearly 40%.
Mr. Trump’s tariff threat has created uncertainty for lumber wholesalers and contractors that could delay rebuilding. The U.S. can’t ramp up lumber production in the near term to meet domestic demand, so contractors will have to eat the tariff cost on lumber from Canada or import more from other countries, which would be expensive.
If Mr. Trump wants to increase U.S. lumber production, he could open up more federal land for logging as he sought to do in his first term. Timber sales from U.S. Forest Service land increased 7% from 2016 to 2020 but fell 6% from 2020 to 2023. More tariffs will punish Americans trying to rebuild.
