The United States Department of Commerce imposed on Monday a 20% import tax on softwood lumber from Canada. The measure is the latest indication of mounting economic tensions between the U.S. and its northern ally. In a press release, U.S. Secretary of Commerce Wilbur Ross said, “It has been a bad week for U.S.-Canada trade relations.”
The U.S. imported $278.1 billion worth of goods from Canada in 2016. Softwood lumber accounted for $5.6 billion of the imports.
> Share of imports from Canada: 20.8%
> Value of Canadian imports: $25.3 billion (3rd largest)
> Share of exports to Canada: 26.5% (16th largest)
> Value of exports to Canada: $15.9 billion (5th largest)
The new import tax is widely viewed as a reaction to allegations that the Canadian government is effectively subsidizing its lumber industry. Canada has for decades permitted companies to log government land at below market cost, leading to competitive disadvantages for American lumber companies. For many, including Secretary Ross, this is perceived as a violation of the North American Free Trade Agreement.
NAFTA also stipulates that goods be freely traded, without import taxes, between the United States, Canada, and Mexico.
President Donald Trump was an outspoken critic of NAFTA on the campaign trail, famously referring to it as “the worst trade deal” in U.S. history. The new tariff may actually be a negotiation tactic, as Secretary Ross was appointed to be a critical player in the Trump administration’s stated plans to overhaul NAFTA.
The tariff’s effects could have far reaching implications for economic relations between the United States and Canada. Many states are heavily dependent on Canada as a trading partner. At least one-quarter of all imports in 13 states come from Canada. Some 82.5% of Montana’s imports originate in Canada.
On the other side of the coin, 17 states send at least 25% of all exports to Canada. Canada imported $3.2 billion worth of goods from North Dakota in 2016, or about 77.6% of the state’s total exports that year.
24/7 Wall St. reviewed 2016 import and export data for all 50 U.S. states and Canada. States were ranked by the total share of imports originating in Canada. All data is from the U.S. Census Bureau.
Correction: Due to a transcription error, a previous version of this article incorrectly gave $278.1 trillion as the value of goods imported to the U.S. from Canada. The correct value is $278.1 billion.