Autumn is slowly settling on the valley. The river out back is running low and clear — a departure, this year, from the norm. August was as rainy as anybody can remember, and high water and mud have kept the normal contingent of Sunday-afternoon floaters to a minimum. The farmers did well by the August rains, and the corn, beans and hay crops are all looking to be great.
Of course, international politics creeps into every conversation, as the specter of tariffs looms on the horizon, but nothing has affected the locals, yet, and people don’t seem too upset.
Nor should they be. As with the promise of agricultural bounty, our own industry is cooking along at record levels for building permits, housing starts and renovation spending. Wages are up, the economy is up and industry is up. I guess, even as when the U.S. sneezes, Canada catches a cold, so, then, when the U.S. is feasting, Canada benefits.
Even in bad news there is promise. The devastating results of Hurricane Florence mean that people in its path will have to rebuild, which means some of that work will trickle down to Canadians. The U.S. has a long way to go before it recovers its lost domestic manufacturing capacity, and we can help.
I don’t think it’s proper to dismiss the potential damage of the threatened U.S. tariffs against Canada, but it is also important to recognize that those sanctions are only a sideshow compared to the face-off happening between the megaliths China and the U.S.
It was only 10 years ago that this column was looking at China as an advancing juggernaut, eating up the margins existing in North American trade. Back then, they were nothing but a wanna-be. But then the market crash and the U.S. housing bubble happened, and China moved in with a vengeance.
I have had the opportunity to go to China a number of times, and we always talk business. My associates over there were very frank, especially about wood products. “If the Americans put a 20 percent duty on wood products on the front end,” they smiled, “we put a 20 percent subsidy on the back end.”
So nobody gets hurt? Not exactly. This gets into an intricate scheme of currency manipulation, and, rather than go off into the weeds on economics, let’s just say it’s hard to explain how we can send hardwood over there for a buck a foot, just to make up a number, and they can process it into flooring and send it back for 80 cents. I guess ocean transport is even more efficient than we thought. Or somebody is cheating.
For a less abstract example, let’s look at the world’s richest man, Jack Ma. Chinese, by the way. He owns Alibaba.com.
Lee Ann owns a small herd of guinea pigs, so I went on AliExpress and looked up guinea pigs. There, I see I can buy a guinea pig bed in my choice of six colours and two sizes, each for $1.74 Cdn., with free shipping from China.
In the alternative, I can spend $1.20 and a normal business-sized envelope across the province in four days. Perhaps it’s the boat again. Or perhaps somebody is cheating.
Cheating is nothing new for Alibaba. They may actually be the world’s greatest source of counterfeit goods. I didn’t check the brand on the pig bed. I’d hate to think they’d counterfeit even that. One thing’s for sure. I’m not going into guinea pig bed manufacturing when it costs more to send the invoice than I get for the whole bed, done and dusted.
The point is that the U.S. might end up being our protective big brother, after all. The trade war between the U.S. and China is looming large, and each party is posturing.
The thing is, I think Trump is right. I think when you’re running a $375 billion deficit, you have all the cards, since anything they force the States to pay will come out of the deficit, at minimum.
I’m not arguing politics. I think Trump will win; you may not. But with the two bullies on the playground facing off after school, the rest of us can weigh odds and place bets.
My bet is that the wood industry in Canada is better off in five years than even it is now.