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Paul Brandus: Millions of U.S. jobs depend on the Biden administration respecting America’s No. 1 trade partner — and it’s not China

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If Canadians could have voted in the U.S. presidential election, Joe Biden would have beaten Donald Trump by an even bigger margin than he did. An October 2020 poll in Maclean’s, the respected Canadian newsmagazine, found that Canadians backed Biden by a 72% to 14% margin, a cavernous 58-point gap. 

Biden has pleased our neighbor to the north in several ways so far, including re-entering the Paris climate accord, attempting to re-engage with Iran and emphasizing the importance of trans-national alliances. Biden’s ditching of Trump-era belligerence and condescension has also earned points. 

Yet don’t think it’s all kumbaya between the two countries. Biden and others already have done a few things to irritate Canada — the biggest market for exports of U.S. goods and services, according to data from both the Census Bureau and office of the U.S. Trade Representative

Keystone XL Pipeline

The new drapes in the Oval Office had barely been hung when the president cancelled the construction permit for the Keystone XL oil pipeline, which would have transported up to 830,000 barrels of carbon-heavy oil from the Canadian province of Alberta to refineries along the U.S. Gulf Coast. The on-again, off-again project was killed by President Barack Obama and revived by Trump before being put on ice again by Biden.

Canadians knew this was coming; after all, Biden said during the campaign he would halt the Keystone pipeline dvelopment. Still, Canadian Prime Minister Justin Trudeau said bluntly, “We are disappointed.” 

Enbridge’s ‘Line 5’

In another controversy over pipelines, Michigan’s Democratic Governor Gretchen Whitmer has stepped up her fight to shut down a key pipeline that serves much of the Midwest. 

Enbridge’s
ENB,
+0.49%

“Line 5” transports more than half a million barrels a day of oil and natural gas liquids from Canada to the U.S. Great Lakes region. But 4.5 miles of that pipeline run across the Straits of Mackinac, between Michigan’s upper and lower peninsulas. 

Whitmer fears a “catastrophic oil spill in the Great Lakes that could devastate our economy and way of life,” and has sought a state court injunction to force Canadian-based Enbridge to “permanently decommission” the pipeline. But the U.S. regulator that oversees such things, the Pipeline and Hazardous Materials Safety Administration, has said that it is “presently aware of no unsafe or hazardous conditions that would warrant shutdown of Line 5,” and history tells us that pipelines are far safer to transport oil than, say, railroads. 

On top of a shutdown that would deprive refineries in Michigan, Ohio and Pennsylvania of crude — which could imperil thousands of jobs — Whitmer is causing a foreign policy stink by attempting to mess with a long-standing treaty between the U.S. and Canada that governs these matters. 

Lumber tariffs 

One reason why home prices are soaring? Lumber
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shortages, which have added — get this — about $36,000 to the cost of a new U.S. home, according to the National Association of Home Builders (NAHB).

The pandemic is one reason for this; lumber mills have had to slow or curtail operations. But another reason has been U.S. tariffs on Canadian lumber. Trump slapped steep tariffs on softwood lumber in 2017, before lowering them in December 2020.  But not only has Biden not removed them, he’s now proposing to double them to more than 18%.  

Aside from irritating Canadian lumber producers, Biden’s proposal has caused the normally diplomatic NAHB Chairman, Chuck Fowke, to lash out at the administration. “The Biden administration’s preliminary finding on Friday to double the tariffs on Canadian lumber shipments into the U.S. shows the White House does not care about the plight of American home buyers and renters who have been forced to pay much higher costs for housing,” Fowke said in a statement.

Spilling milk

The Biden administration has launched a trade dispute against Canada’s dairy industry. U.S. Trade Representative Katherine Tai claims that American dairy producers aren’t getting proper access to Canadian markets, as defined by the new U.S.-Mexico-Canada (USMCA) trade agreement. The basic dispute concerns how Canada is using its tariff-rate quotas to determine how much milk, cheese and other dairy products can be imported at lower duty levels.

Some context is needed here. Biden is seen as a sigh of relief in Canada, which last year was full of “anybody but Trump” talk. Since Biden’s inauguration, the percentage of Canadians who have a favorable opinion of the United States has jumped 14 points, according to a recent Morning Consult poll. That’s the good news. 

The bad news: That approval rating is only 40%, meaning that most Canadians have a negative opinion of the U.S. We’re still in repair mode from the damage done by the Trump administration, and while some Americans might not care what other countries think about us, given that Canada is the No. 1 destination for U.S. exports— and linked to some nine million American jobs — they should care. And the Biden administration,and others should take care not to pick too many fights with them.

Also read: Biden’s $6 trillion budget is here. What it means for markets.

More: Biden’s $6 trillion budget framework features new social spending underpinned by higher taxes on businesses and the rich

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