TWO WEEKS ago the Bush administration slapped tariffs on imported steel, a decision that raises costs to American consumers and amounts to a tax increase. Today the administration may do something considerably more original: It may force Canada's government to tax American consumers. Given its claims to hate taxes, the administration is putting on an impressive show of flexibility.
In negotiations that might end today, the Bush team is reportedly telling Canada to impose a 37 percent tax on lumber exports to the United States. Since a third of the lumber used in this country comes from Canada, that kind of tax would push up home prices considerably. The home-builders' association claims the export tax would add $1,000 to the price of the average home, which would mean in turn that 300,000 families that would otherwise qualify for mortgages would now not do so. Of course, more expensive homes also mean that fewer new ones will be built and jobs will be lost. The home-building industry employs 30 times more people than the domestic lumber industry that is lobbying for the export-tax protection.
The administration says that the tax increase will be in place only until Canada does away with alleged subsidies to its lumber industry. How should it eliminate those supposed subsidies? The administration is proposing a remedy so complicated that you'll wish you hadn't asked that question. Source.