Assessing the impact of export taxes on Canadian softwood lumber

This study examines stock price reactions, for both U.S. and Canadian softwood lumber producers, to a series of events culminating in the 1986 Memorandum of Understanding under which Canada agreed to impose a fifteen-percent export tariff on lumber shipped to the U.S. Our results indicate that a number of these events were accompanied by significant reactions in directions consistent with our priors. Notwithstanding that the events in question pertained principally to the prospects of a tariff, it is possible that these events also had implications for the outcome of free trade negotiations in progress during this time frame.