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Trade War Causing Spike in Plywood Prices

June 04, 2018

Trade war between the United States and Canada causes spike in plywood prices

In a bold move last Thursday, the Canadian government announced retaliatory duties totalling $16.6 billion USD against a long list of US products.  These duties are in reaction to the tariffs imposed by the United States on imports of Canadian steel and aluminum products.  

In a press conference, Canada’s Foreign Affairs Minister, Chrystia Freeland, said:  “This is the strongest trade action Canada has taken in the post-war era. This is a very strong response, it is a proportionate response, it is perfectly reciprocal. This is a very strong Canadian action in response to a very bad U.S. decision.”

The list of US products was strategically selected to inflict pain in key states to pressure the White House to change its course of action.  Taxing chocolate and toilet paper, for instance, will hurt Pennsylvania, a state that was key in Trump’s election victory.

Embedded in the long list of products is plywood.  Presumably, plywood was selected in retaliation for the current tariffs on Canadian softwood lumber. Regardless of the reason, a 10% tariff is scheduled to be applied to imports of American plywood on July 1st. This announcement took Canadian producers by surprise, and some reacted by raising prices by 8% on Friday, while others went off market to form a strategy.  

Will these prices hold?  Will these tariffs come into effect?  Will the US back down?  These are all questions we don’t know the answer to yet, but you will be the first to know once we do.

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