Trump to impose tariffs on Canadian softwood lumber

by Jordan Fabian and Vicki Needham - 04/24/17 7:30 PM ET

The Trump administration will slap new tariffs on softwood lumber entering the U.S. from Canada, a move sure to inflame a long-running trade dispute between the two countries.

President Trump announced his decision Monday evening during a reception with conservative journalists, and a White House official confirmed it.

The Commerce Department later said it would impose a “countervailing duty” of between 3 percent and 24 percent on Canadian lumber exporters.

Commerce Secretary Wilbur Ross said the duties would amount to about $1 billion on softwood lumber.

“It has been a bad week for U.S.-Canada trade relations,” Ross said in a statement.

{mosads}He cited Canada’s decision to “cut off the last dairy products being exported from the United States” as part of the growing problems between the two neighbors and added, “This is not our idea of a properly functioning free trade agreement.”

U.S. lumber producers will be pleased by Trump’s decision; they have long alleged that Canadian lumber imports are unfairly subsidized because companies north of the border can source timber from government-owned land.

Canada has long denied that it subsidizes lumber, saying that producers must pay market rates for its wood. Softwood lumber is one of Canada’s largest exports, and the U.S. takes in almost 80 percent of the supply.

New tariffs could hurt ordinary Americans by driving up the price of homes, critics say. Since the dissolution of the most recent U.S.-Canada lumber deal, wood prices have jumped about 20 percent.

The Commerce Department’s decision brought a strong rebuke from the Canadian government, which vowed Monday evening to “vigorously defend the interests of the Canadian softwood lumber industry, including through litigation.”

“The Government of Canada disagrees strongly with the U.S. Department of Commerce’s decision to impose an unfair and punitive duty,” Canadian officials said in a statement.

“The accusations are baseless and unfounded,” said Jim Carr, Canada’s minister of natural resources, and the Chrystia Freeland, the minister of foreign affairs.

Carr and Freeland argued that the decision hurts workers on both sides of the border and will push up housing costs for U.S. consumers.

“In ruling after ruling since 1983, international tribunals have disproved the unfounded subsidy and injury allegations from the U.S. industry,” they said.

“We have prevailed in the past and we will do so again.”

The move, which comes close to Trump’s 100th day in office, is another example of his desire to take a tougher approach on trade.

Trump reportedly said he might impose an import tax on Canadian dairy in response to what he said was an “unfair” Canadian tax on certain U.S. milk products.

“What they’ve done to our dairy farm workers is a disgrace. It’s a disgrace,” Trump said last week, adding that he thinks the North American Free Trade Agreement is responsible for the dispute.

The softwood lumber standoff has lasted decades. The issue was revived after a mutual truce on trade litigation expired last year.

Former President Obama and Canadian Prime Minister Justin Trudeau agreed in June to finally resolve the issue, but the two nations failed to lock in a deal before that agreement expired in October.

A group representing U.S. lumber companies filed a petition with the Commerce Department in November asking for punitive tariffs on Canadian softwood lumber.

Commerce is expected to levy a second anti-dumping tax on June 23. The two tariffs will be combined, and the Canadian government will have to wait until next year to appeal.

Ahead of the expiration of last year’s agreement, top Canadian officials said they were eager to forge a new softwood lumber deal, meeting regularly with U.S. government and U.S. Lumber Coalition officials.

But they said talks eventually broke down with the push for more protectionist measures by the U.S. Lumber Coalition.

Sen. Ron Wyden (D-Ore.), the ranking member of the Senate Finance Committee, applauded the Commerce Department’s decision.

“Unfairly traded softwood lumber from Canada has for decades hurt mill towns and American millworkers in Oregon and across the country,” Wyden said.

“Today’s announcement sends the message that help is on the way,” he said.

Updated 9:48 p.m.

Tags Ron Wyden