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Trump Inadvertently Cripples U.S. Coal Exports

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Everything If You Want Things

Everything If You Want Things

The Cheeto-in-Chief’s shoot from the hip governing style has struck again, this time screwing his big time buddies, the US coal industry. I giggled.

On Monday, at the urging of the U.S. timber industry, Trump imposed tariffs of up to 24 percent on imports of Canadian softwood lumber. The issue of Canadian lumber imports has been vexed for years, but this latest hardball from Trump—especially at a time when he is threatening to pull the United States out of NAFTA—hit a nerve with Canada. On Tuesday, Prime Minister Justin Trudeau promised to stand up for Canada’s lumber industry, warning, “You cannot thicken this border without hurting people on both sides of it.”

Today, British Columbia Premier Christy Clark dropped a bombshell tweet, saying, “It’s time to ban thermal coal from BC ports.” In a letter to Trudeau, she wrote:

For many years, a high volume of U.S. thermal coal has been shipped through BC on its way to Asia. It’s not good for the environment, but friends and trading partners cooperate. So we haven’t pressed the issue with the federal government that regulates the port.

Clearly, the United States is taking a different approach. So, I am writing you today to ban the shipment of thermal coal from BC ports.

Clark goes on to note the success of the Beyond Coal movement in shutting down coal terminals on the U.S. Pacific Coast:

As you may know, over the past five years, every proposed coal export facility on the West Coast of the United States has been rejected or withdrawn, typically as a result of ecological or environmental concerns. . . . Oregon, Washington, and California have all made significant commitments to eliminate the use of coal as a source of electricity for their citizens. In fact, in August 2016, Governor Jerry Brown of California signed Bill 1279 that banned the provision of any state transportation funding for new coal export terminals.

Due to the lack of U.S. terminals, Clark says, U.S. exports through Canada have been increasing. Last year, she says, 6.2 million tons of U.S. thermal coal moved through the Port of Vancouver, and the number was expected to increase in the future.

(click here to continue reading D’oh! Donald Trump Inadvertently Cripples U.S. Coal Exports | Sierra Club.)

Maybe If You Slowed Down
Maybe If You Slowed Down

a little background about the lumber dispute which led to the imposition of tariffs: doesn’t seem like it is that clear of a “win”.

The average American’s stake in all of this — or the average Canadian’s, for that matter — is considerably less clear than the Trump administration’s rhetoric would imply.

As a lumber producer, Canada enjoys a basic advantage over the United States: a timber inventory that’s 13 times greater, per capita, according to Daowei Zhang, a professor of forest economics and policy at Auburn University who has made a career of his own studying this never-ending kerfuffle. Canada’s resource endowment, plus exchange rates and many other economic factors, helps explain the rise of Canadian softwood-lumber imports from a mere 7 percent of the U.S. market during the Korean War to 30 percent or so in recent years.

U.S. producers emphasize the fact that Canada’s forests are government-owned, whereas most U.S. timber stands are on private land. Provincial agencies set the price loggers must pay — delightfully known as the “stumpage fee” — for cutting down pines and other conifers, a.k.a., “soft” wood. U.S. producers say that this results in below-market stumpage fees for Canadian loggers — or, as the U.S. industry contends, a subsidy.

A 2105 Congressional Research Service report called evidence on this point “widespread, but inconclusive.” The U.S. side has not fared well in international arbitration. Even so, Canada has agreed to a series of temporary market-sharing agreements, the most recent of which expired in the waning days of the Obama administration, thus freeing the Trump team to take its new position, whether in earnest or as posturing ahead of a NAFTA renegotiation remains to be seen.

The best thing for the public, in both countries, would be to use market mechanisms to allocate timber resources to the maximum extent feasible, then allow free cross-border trade in lumber as in (almost) everything else. May the most efficient producer win!

Certainly, limiting imports of Canadian lumber, whether through tariffs or by negotiated agreement, will make U.S. housing more expensive, since Canada supplied roughly 31 percent of the U.S. market for softwood lumber in 2016 and softwood lumber accounts for about 7 percent of the construction cost of a home, according to the Washington-based National Association of Home Builders (NAHB).

The NAHB, another D.C. lobby that the softwood-lumber dispute periodically activates, estimates that the jobs that Trump’s latest move saves in American saw mills would be offset elsewhere, resulting in a net loss of 8,241 U.S. jobs, $498.3 million in wages and salaries, and $350.2 million in taxes and other government revenue.

No doubt the housing lobby is a dubious proxy for the public, given its own dependence on government market manipulation and subsidies. Yet, in this case, the NAHB study illustrates a valid point: The Trump administration is not proposing to protect America from Canada; it’s proposing to protect certain American special interests from certain Canadian special interests.

(click here to continue reading Trump has set out to protect lumber workers. Instead, he’s helping lobbyists. – The Washington Post.)

So Trump purses his lip, imposes a tariff on Canadian lumber to show how “tough” he is against those meanie Canadians, and ends up screwing his coal producing buddies. Doh! Coal is a dirty, dying business, and shouldn’t be propped up in any circumstance.

Oh, and since I had to look it up: thermal coal is coal used for power generation, as opposed to metallurgical coal used mostly for steel production.

Written by Seth Anderson

April 27th, 2017 at 9:02 am

Posted in Business,environment,politics

Tagged with ,

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