- The U.S. Department of Commerce will significantly raise the combined duty rate on Canadian softwood lumber products to 14.54 per cent from 8.05 per cent
- This reflects heightened concerns over what the U.S. government describes as Canada’s “continued subsidization and dumping of softwood lumber products into the U.S. market”
- The new combined duty rate will apply retroactively to exports made in 2022 and will impact new exports of softwood lumber products to the United States
- Canadian lumber producers have already paid more than C$9 billion in duties, which are held in deposit until this dispute is resolved
U.S. nearly doubles Canadian softwood lumber duties
The U.S. Department of Commerce has announced the final results of its fifth administrative review of anti-dumping and countervailing duties on certain Canadian softwood lumber products, significantly raising the combined duty rate to 14.54 per cent.
This marks a substantial increase from the previous rate of 8.05 per cent, applied in the fourth review, reflecting heightened concerns over what the U.S. government describes as Canada’s “continued subsidization and dumping of softwood lumber products into the U.S. market.”
U.S. government’s stance: defending domestic industry
The U.S. government has long accused Canada of engaging in unfair trade practices, asserting that Canadian softwood lumber products are subsidized by the Canadian government and then sold in the U.S. at less than fair value. These practices, according to U.S. officials, distort the U.S. softwood lumber market to the detriment of U.S. sawmills, their employees and local communities.
The latest review by the Commerce Department has confirmed increased levels of what it describes as “unfair trade,” suggesting that these practices are exacerbating existing market challenges. With lumber prices at extreme lows, the U.S. sawmill industry is facing severe pressure, leading to mill closures and layoffs. The U.S. lumber industry, which has long fought for the imposition of anti-dumping and countervailing duties to combat these challenges, views the Commerce Department’s decision as a necessary measure to protect domestic jobs and businesses.
In a statement, the U.S. Lumber Coalition, representing the interests of U.S. lumber producers, expressed strong support for the continued enforcement of U.S. trade laws. “This even higher level of unfair trade by Canada could not have come at a worse time for domestic producers,” Andrew Miller, chairman of the U.S. Lumber Coalition and CEO of Stimson Lumber said.
“Lumber demand and prices are at record lows and mills across the country are struggling to keep afloat,” he added.
Canada’s response: A call for fair trade
In response to the U.S. decision, Canada’s minister of export promotion, international trade and economic development, Mary Ng, expressed deep disappointment.
The new combined duty rate will apply retroactively to exports made in 2022 and will impact new exports of softwood lumber products to the United States from companies subject to the fifth administrative reviews.
“Canada is extremely disappointed that the U.S. Department of Commerce has significantly increased its unfair and unwarranted duties on softwood lumber from Canada,” Ng said in the Canadian government’s release. She criticized the U.S. measures as “baseless and unfair,” arguing that they unjustifiably harm consumers and producers on both sides of the border.
Minister Ng further emphasized the negative impact of these duties on workers and their communities, particularly in the U.S., where the increased cost of Canadian lumber could exacerbate the affordability crisis in the housing market. “U.S. consumers and businesses that need Canadian lumber will bear the burden of these duties, making housing even less affordable for Americans,” she said.
The Canadian government intends to continue to fight these duties through all available legal channels, including litigation under NAFTA, the Canada-U.S.-Mexico Agreement (CUSMA), the U.S. Court of International Trade and the World Trade Organization (WTO). Ng stressed the importance of finding a lasting resolution to this long-standing dispute, which she believes is in the best interests of both nations.
The increase couldn’t come at a worse time, according to the B.C. Lumber Trade Council, making already challenging times for the industry even worse.
“The increase in U.S. tariffs on B.C. lumber products will exacerbate the extremely challenging conditions faced by B.C. producers and will impact manufacturing operations, jobs and communities around the province,” president Kurt Niquidet said in a release to media.
Canadian lumber producers have already paid more than C$9 billion in duties, which are held in deposit until this dispute is resolved.
Outlook: Challenges ahead for Canada’s lumber industry
The increased duties are expected to pose significant challenges for Canada’s lumber industry, particularly as it navigates an already volatile market. The higher cost of exporting to the United States, the largest market for Canadian lumber, might force Canadian producers to seek alternative markets or face the difficult decision of reducing production.
However, the Canadian government has indicated its intent to defending the interests of its lumber industry. The ongoing legal battles and diplomatic efforts highlight the complexities of the trade relationship between Canada and the United States, with softwood lumber continuing to be a contentious issue.
As the dispute persists, Canadian and U.S. stakeholders will closely monitor the developments, hoping for a resolution that balances the interests of all parties involved. Until then, the Canadian softwood lumber industry faces an uncertain future, with the potential for further economic fallout on both sides of the border.
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