50% Tariffs Take Effect, Canadian Goods Respond By Costing Americans 50% More
The latest round of 50 per cent tariffs on Canadian goods came into force this morning, and within hours the intended target was identified: a lumber wholesaler in Buffalo who now pays half again as much for two-by-fours he has been buying from Kamloops since 1994.
The tariff is described in Washington as pressure on Ottawa. Mechanically, it is a tax collected at the U.S. border, from a U.S. importer, in U.S. dollars, which is an unusual way to punish a foreign country. The cheque clears in Ohio. The pain arrives in Ohio. Ottawa learns about it on the news.
Canadian exporters, for their part, have adopted the national coping strategy of pretending this is a chance to diversify. Trade associations released statements containing the phrase "new markets" eleven times. When asked which markets, one spokesperson said "the EU" with the confidence of a man who has never tried to ship softwood to Rotterdam.
The real behaviour change is subtler. Canadian firms are not finding new buyers so much as quietly absorbing margin, laying off the shift they were going to add, and waiting. Waiting is Canada's largest export by volume.
Meanwhile the White House has begun describing tariff revenue as money "paid by Canada," which is true in the same sense that a parking ticket is paid by the parking space.
The Buffalo lumber wholesaler has responded to the pressure campaign in the only way available to him. He raised his prices, and he blamed Canada, because his customers find that explanation soothing.