US levies another batch of tariffs on Canadian softwood lumber

US levies another batch of tariffs on Canadian softwood lumber
© Getty Images

The U.S. is slapping more tariffs on the Canadian softwood lumber industry less than two months ahead of the start of talks on an updated North American Free Trade Agreement (NAFTA).

The Commerce Department on Monday said it would impose up to 7.7 percent in preliminary anti-dumping duties on Canadian lumber imports, the second set of tariffs since April over the prolonged lumber dispute between the two countries. 

Commerce Secretary Wilbur Ross said the rates would run between 4.59 percent and 7.72 percent.

“The United States is committed to free and fair trade, as seen today with the preliminary decision to exclude softwood lumber from the Canadian Atlantic Provinces in the ongoing antidumping and countervailing duty cases,” Ross said.

ADVERTISEMENT
Earlier on Monday, Commerce said that softwood lumber products produced in Newfoundland and Labrador, Nova Scotia and Prince Edward Island should be excluded from the ongoing investigation.

“While I remain optimistic that we will be able to reach a negotiated solution on softwood lumber, until we do we will continue to vigorously apply the AD and CVD laws to stand up for American companies and their workers,” he said.

The U.S., Mexico and Canada are expected to start NAFTA discussions on Aug. 16 with the aim to complete a new, modernized deal by early next year. 

But long-time trade irritants such as lumber and dairy with Canada may weigh heavily on how fast those discussions move forward despite the advance work being done by coalitions of U.S., Canadian and Mexican business groups to smooth the process. 

On April 24, the Commerce Department said it would impose a countervailing duty of between 3 percent and 24 percent on Canadian lumber exporters. 

When combined the duty rates range from 17.41 percent to 30.88 percent. 

The Canadian government will have to wait until next year to appeal.

In response, British Columbia lumber producers expressed their desire to reach a new agreement on softwood lumber.

"These duties result from the trade action which is part of the continued attempt by the protectionist U.S. lumber lobby to constrain imports of high-quality Canadian lumber into the U.S. market and to drive up prices for their benefit,” said Susan Yurkovich, president of the BC Lumber Trade Council, in a statement.

“The ongoing allegations leveled by the U.S. industry are without merit,” Yurkovich said.

“This was proven in the last round of litigation and we fully expect it will be the case again.”

Canada has denied that it subsidizes the lumber industry because producers must pay market prices for wood. The U.S. imports almost 80 percent of Canada's softwood lumber.

In 2016, imports of softwood lumber from Canada were valued at an estimated $5.66 billion.

The rates announced on June 26 by Commerce include: Canfor: 7.72 percent; Resolute: 4.59 percent; Tolko: 7.53 percent; West Fraser: 6.76 percent; All others: 6.87 percent.

The U.S. Lumber Coalition, which called for the investigation, agreed with the decision to take additional action against Canada.

"For years, Canada has unfairly distorted the softwood lumber market with billions of dollars in support of their producers,” said U.S. Lumber Coalition spokesman Zoltan van Heyningen. 

“This has allowed Canadian producers to dump their product on the U.S. market to the detriment of U.S. manufacturers, as now confirmed by the Department of Commerce," he said. 

But homebuilders argue the move could hurt U.S. consumers by driving up prices here.

Granger MacDonald, chairman of the National Association of Home Builders, called Commerce’s latest action "another tax on American home builders and home buyers that will jeopardize affordable housing in America.”

“Given that lumber is a major component in new home construction, the combined duties will harm housing affordability and price countless American households out of the housing market,” MacDonald said.