Why the U.S. Imports Oil and Lumber

In making the case for new tariffs on U.S. imports from Canada and Mexico, President Donald Trump argued that the U.S. doesn’t “need the products that they have,” specifically mentioning crude oil and lumber from those countries.

“We have all the oil you need. We have all the trees you need, meaning the lumber,” he told reporters on Jan. 30, two days before he announced, and then paused, the new tariffs on imports from those countries. “We have more than almost anybody in those two categories, and oil we have more than anybody and we don’t need anybody’s trees.”

Staff Writer D’Angelo Gore consulted experts who said that, in theory, the U.S. could meet domestic demand with its own oil and lumber resources. But the reality is quite different. It would take time and money to make such a transition, among other factors. 

D’Angelo wrote: “On paper, it may appear that the U.S. does not need imports of oil from Canada or Mexico. But the imports are of heavier crude oil than what the U.S. mostly extracts.”

Many U.S. refineries – built decades ago, before the U.S. “shale boom” – are configured to process the heavier crude oils. That’s why the U.S. also exports some of its lighter crude oil that other countries’ refineries are better configured to handle. 

“The U.S. could, if necessary, become self-sufficient,” David Gantz, a fellow in trade and international economics at Rice University’s Baker Institute for Public Policy, told D’Angelo. However, he said “it would require significant and expensive modifications” to U.S. refineries.

Lumber has a similar story. 

“Sure: we could probably meet most of our lumber needs domestically,” Marc McDill, an associate professor of forest management at Penn State University, told D’Angelo. “The reasons why we don’t basically boil down to two things: 1) sometimes imports are cheaper than our own suppliers, and 2) we value our forests for a lot of other things besides producing lumber.”

The U.S. would need new logging capacity, and Canada also has different types of lumber that builders may prefer for certain projects. 

For more, see D’Angelo’s story: “Trump on U.S. Imports of Oil and Lumber.”
 

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Wrapping Up

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