With the first 100 days of the Trump Administration in the rearview mirror and more and more of the President’s team moving into the federal agencies, it is an important time for wood trade professionals to take stock of the President’s agenda. There is no question that President Trump is the most business-friendly president in generations. That said, his “America First” principle, if implemented in a manner that does not take into account the realities of modern manufacturing supply chains, could imperil U.S. competitiveness and cost our economy the very jobs we all agree are so important.
The recent brouhaha surrounding the President’s abandoned decision to pull out of the North American Free Trade Agreement is a textbook example of U.S. business leaders communicating how protectionist policies will negatively impact their businesses. Reports indicate that once word got out about White House staff drafting an executive order that would have put in motion withdrawal from NAFTA, the phone in the Oval Office began ringing off the hook with calls from Fortune 500 CEOs trying to talk the President out of it because of the real negative effect it would have on their bottom lines. In the end, these calls and others accomplished their goal and the President announced his intention to work to renegotiate the 23 year old Agreement.
While it looks like NAFTA talks will be in full swing without the threat of trade ceasing during discussions, the outcome is not so clear when it comes to the ongoing U.S.-Canada softwood lumber dispute. In April the U.S. Department of Commerce imposed preliminary duties on imports of softwood lumber from Canada, and the rhetoric from both Washington and Ottawa has been increasingly bellicose. In May the Canadian Government indicated that retaliatory tariffs on U.S. exports of coal may be imposed. The Canadian Government is also investigating whether wood products companies in Oregon are receiving illegal subsidies. If a new agreement isn’t reached soon, we could see the beginning of a trade war with our closest neighbor and second-largest trading partner. If this were to occur both countries would lose jobs and income as supply chains were reorganized for political rather than economic reasons.
China, our largest trading partner has also factored strongly in President Trump’s agenda. Throughout the campaign Trump lashed out at China as a currency manipulator that is taking advantage of the global system at the expense of U.S. workers. Upon taking office, however, it became clear that the relationship is more complicated than that, with President Trump urging China to do more to contain North Korea in exchange for reducing some of the harsh rhetoric on trade. Most recently, the U.S. and China agreed upon a 100 days of trade talks initiative that has already netted an agreement to increase access for U.S. financial firms and expand trade in beef and chicken among other steps as part of Washington's drive to cut its trade deficit with Beijing. This dynamic could affect the AD/CVD investigations on hardwood plywood from China which will play out over the coming months.
As leaders in our industry, we must all work together to prevent these disputes from occurring or spiraling out of control. IWPA will continue to communicate the importance of the wood trade industry jobs in the U.S. manufacturing and retail industries that rely on the global supply chain for specialized goods at competitive prices. When armed with accurate information, political leaders often come to understand that short-sighted protectionism is more harmful to the pocketbooks of the vast majority of voters they represent than free and fair trade that ensures that U.S. businesses remain among the most competitive in the world.
IWPA encourages its Members to come to Washington, D.C. each fall for our Washington Briefing and Fly-In. But we also urge business leaders to invite their Members of Congress and staff to visit their facilities. Spending a few hours visiting your representatives’ district offices will go a long way to help them understand your business and the challenges you face.
It’s been seven decades since a consensus formed in the wake of World War II that open trade increases global wealth is conducive to peace. Unless business leaders are engaged, a new consensus could form that reverses the gains we’ve made in that time. The only way to prevent that is to get in the fight!