In a recent “Ranger Rick” article, Mr. Basura wrote in a comment:
“Free Market Man, you’ve yet to comment on Trump’s proposal to put tariff’s on Canadian lumber. Maybe you need to change your blind support as a Trumpkin.” Mr. Basura, thank you for the comment and I will attempt to address your concern – I always love educating a liberal, since education today is lacking in economics in public schools. Do they still teach that discredited and outdated Keynesian theory anymore? Deplorable indeed.
As I’m a thinking man and always enjoy a challenge and love economics and the study of the money, markets, and government policy I will comment on the tariff tiff.
The softwood lumber (pine) from both Canada and the U.S. have been at odds for years, this is nothing new. The problem is most of the forestry ownership in the United States is largely held by lumber companies. In Canada, they are mostly owned by the government and the American mills contend the Canadians are subsidized by their government/provinces by charging low royalty rates for cutting trees.
The contention is the prices for Canadian and U.S. lumber favor Canadian lumber because they can sell it cheaper due of low overall cost of production. The practice is called “price dumping” to gain market share, similar to what Japanese cars were enjoying for years when no tariffs or production limits were applied and then they made product here when unfair tactics were alleged in Congress and limits were imposed. So they came to the States to build their cars with American labor, becoming large employers of Americans. The Japanese are ingenious when faced with a problem. But there is more to the issue.
The spark that started the tariff talk, besides the low wood prices, was the Canadian dairy trade practices that President Trump complained about. The Canadians recently changed the pricing of ultra-filtered milk, a high protein concentrate used in making cheese, creating a new price category of Class 7, which prices it less than global markets, effectively prohibiting the U.S. milk product because of low prices paid for raw product.
So the tiff over the tariff was predicated on the price shift (effectively a tariff on American ultra-filtered milk). Both are problems for both countries. When the wood and dairy industry in both countries are on a level playing field, I’m sure the Trump administration (Commerce Secretary Wilbur Ross) and the Canadian government will come to an agreement.
Until then, the Canadian wood products will be burdened by a tariff, with a 20% duty, and the pricing for ulta-filtered milk products will keep out the American dairy industry from Canadian markets.
There’s a new Sheriff in town, and agriculture and wood industries hired someone that wants and demands a level playing field for products it buys (imports) and sells (exports). If tariffs and increased prices result in both parties coming to the table to agree to a level playing field for trade practices, the tariffs and pricing changes will disappear and the free market will reign as it should. Both Republicans and Democrats should be happy this is happening so we are getting a fair deal for our products and buying at a fair and equitable price for Canadian products.
That Wiley President Donald Trump, a non-politician politician. Winning again is his vision and he is enforcing what will in the end be better for us and our #1 trading partner Canada. Until then, both American/Canadian markets will suffer until a solution is found.
If something like this happened during the previous administrations, there would be little to no notice or action regarding the unfairness in pricing. You know it, I know it, and the industries involved know it. That’s why business prefers someone like President Trump and his administration to help them address the issues. He and the administration have their fingers on the business pulse and the stock market notices the improvement and change in attitudes.
The stock market is booming, but the long period of low interest both for housing and vehicle loan rates and interest on savings have injected huge debt into the market and government. This made savings an unattractive idea due to extremely low interest, and spending cheap money (credit) easy. With college loan debt now larger than personal credit card debt should be a warning that debt must be serviced or bankruptcy will occur. Your government (President Obama) saddled you, the taxpayer, with this debt. Don’t believe me — look it up. College defaults are steadily increasing, so If the economy slows, it will deteriorate quickly and more defaults (losses) will appear on balance sheets. We are at the end of a similar time, the Roaring 1920s, and the recession turned into a Depression, so that is what is staring at us in the future unless things change in Washington quickly — slashing programs, cutting spending, eliminating unnecessary departments. It will happen regardless if voluntary or forced upon government.
I’m a proud Trump deplorable, and will probably vote for him again in 2020 if he keeps his eye on the economic ball and creates fair playing fields for all, helping to create jobs and wealth for everyone. Can he turn things around when everyone is against him? I’m betting he will make a great effort to do so and help make America great again. And Mr. President — keep tweeting so the media can’t filter and piecemeal your message. They hate your tweets because they can’t control the narrative, and their ability to lie to the American public about you and your initiatives are eliminated.
Until then, enjoy your time on the Titanic and have a restful and pleasant trip!
Thanks for the detailed explanation. In summary, free markets are great, as long as they aren’t disadvantageous?
Mr. Basura,
Free markets always have winners and losers only in a pure socialist system do all receive the same reward regardless of effort or risk. The beauty of the free market is all of us have a chance, you, Ranger Rick and I did well because we worked hard, “disadvantageous” is an open word to be interpreted many ways.