Editorial: Tariff will cost U.S. in the end

Tuesday, May 7, 2002 | 8:44 a.m.

We see very little long-term good coming from the average 27 percent tariff the United States finalized last week on softwood lumber coming in from Canada. Unlike the three-year steel tariff the U.S. imposed in March, which buys the domestic steel industry a little time to modernize and shore up worker benefit packages, the lumber tariff has no sunset clause -- unless we define it as the sun setting on U.S.-Canada trade relations.

The tariff comes after the expiration of a five-year softwood lumber agreement between the two countries that the U.S. timber industry claimed favored Canada, partly because several provinces were exempted from the agreement. The Commerce Department agreed with the criticism, concluding after years of study that Canadian softwood -- mostly grown on government land -- is harvested at a price low enough to be considered a government subsidy, thus creating unfair competition. Since duties were first imposed a year ago, thousands of Canadians have lost their timbering jobs. The Canadians are bitter and claim that the United States based the tariff on faulty analysis of the way timber is harvested in that country.

There are negative impacts well beyond the rift the tariff is creating between the two countries. Just as the U.S. is beginning to emerge from the economic havoc caused by Sept. 11, this tariff threatens to slow housing starts -- a fact of particular concern to the economy in Southern Nevada. Analysts say the tariff could add $1,500 to the cost of a new home. The entire wood products industry will see higher costs, sending a ripple effect through many sectors of the American economy.

As the cost of lumber trade for Canadians rises, exports that amounted to about $10 billion in 2001 will dwindle, achieving the desired effect of the Bush administration, which reasons that laid-off U.S. lumber workers will be rehired and our own timber industry will be revitalized. But American forests, privately owned, are not as abundant as Canadian forests and the danger to rivers and wildlife habitat will escalate as timber companies rev up to compensate for the loss of Canadian softwood.

The Bush administration should begin negotiations with our strong ally to the north that would result in trade governed by mutually acceptable guidelines, not tariffs.