As you may remember, former President Donald Trump imposed these tariffs by invoking Section 232 of the Trade Expansion Act of 1962. This ruling subsequently shaped the long-term direction of Canadian industries. With these tariffs, the Biden administration seeks to protect U.S. national security interests. They have cast an expansive net around their products, stretching from furniture and cars to key upstream raw materials like steel and aluminum.
Most recently, on October 14, Trump imposed a 25 percent tariff on upholstered wooden furniture, cabinets and vanities. Yet this move is only the beginning of a larger strategy. The Canadian lumber sector has already endured tremendous and punitive duties, as tariffs have increased from 14.5 percent to upwards of 35 percent. The dramatic rise in tariffs has sent shockwaves through the Canadian market. As a consequence, producers are increasingly reconsidering their price-setting strategies and supply chain management.
President Biden’s trade agenda still reflects the former president’s administration’s tendency to smack furniture with tariffs. They put a mega 50 percent tariff on copper that took effect August 1. This decision points to the mounting friction between the two countries over unfair trade practices and state capitalism.
Trump’s tariffs did not stop there. That’s because he hinted at using tariffs to punish imports. This included agricultural produce, iPhones, and Hollywood films, demonstrating his ambition to extend his reach into critical sectors far beyond the tech industry. Among industries, the automobile sector was hit the hardest. This conflict was exacerbated when Trump imposed a 25 percent tariff on finished automobiles.
To make matters worse, in June, the former president raised the steel and aluminum tariffs to 50 percent. As critics have noted, the justification of this decision cloaked in the rhetoric of national security is absurd. They argue that these steps go too far and will damage international trading partnerships. Tariffs currently apply to the steel used in everyday household appliances such as dishwashers, refrigerators, washing machines, and freezers. This shift has only exacerbated the steep economic headwinds facing manufacturers who rely on these materials.
Trump announced a 25 percent tariff on medium and heavy-duty trucks, effective November 1. As of this writing, no such executive order has been signed to make this tariff official. This continuous state of limbo puts manufacturers and importers in a risk averse position to create an artificially constrained regulatory landscape.
The latest chapter in Trump’s tariff strategy took a drastic turn when he used national security powers to impose broadly-aimed tariffs on Canada. He defended these moves by citing worries about fentanyl smuggling. This shocking rationale has created much alarm among trade experts. They claim that it departs from the well established traditional economic rationale for these types of measures.
Due to implementation of these tariffs, various Canadian sectors have faced major disruptions. The growing crisis due to soaring inflationary costs, the furniture industry is in a state of crisis. The softwood timber and lumber tariffs initially rose from 10 percent to 30 percent on January, but started even higher at 10 percent as of October 14. The case for the kitchen cabinets and bathroom vanities industry were raised to double tariffs under this administration, worsening price and availability issues.
