U.S. to Impose Softwood Lumber Tariffs on Canada

November 6th, 2017 by Trey Barrineau

Last week, the U.S. Department of Commerce announced that it will impose average tariffs of around 20.8 percent on imports of Canadian softwood lumber.

“While I am disappointed that a negotiated agreement could not be made between domestic and Canadian softwood producers, the United States is committed to free, fair and reciprocal trade with Canada,” said Commerce Secretary Wilbur Ross. “This decision is based on a full and unbiased review of the facts in an open and transparent process that defends American workers and businesses from unfair trade practices.”

The combined final rates by company as announced by the Department of Commerce are: Canfor 22.13 percent; Resolute 17.90 percent; Tolko 22.07; West Fraser 23.76 percent; Irving 9.92 percent; all others 20.83 percent.

The U.S. International Trade Commission will make the final ruling on whether to impose the tariffs based on the degree to which it determines that Canadian imports are hurting U.S. businesses.

The U.S. imports about a third of its lumber. More than 95 percent comes from Canada. In 2016, imports of softwood lumber from Canada were valued at $5.66 billion.

The National Association of Home Builders (NAHB) condemned the move, saying it will jack up the cost of housing in the U.S.

“Today’s move by the Commerce Department to impose duties averaging 20.83 percent on Canadian lumber shipments into the U.S. could not have come at a worse time,” said Granger MacDonald, NAHB chair and a and a home builder and developer from Kerrville, Texas. “Home builders and home owners are already dealing with the monumental rebuilding efforts in the aftermath of the devastating hurricane season and California wildfires. This tariff only adds to the burden by harming housing affordability and artificially boosting the price of lumber. It is nothing more than a thinly disguised tax on American home buyers, home builders and consumers.”

MacDonald said the decision was particularly disappointing considering that NAHB met recently with Commerce Secretary Ross to express its concerns about the issue.

“Unfortunately, the administration is taking protectionist measures to support domestic lumber producers at the expense of millions of U.S. home buyers and lumber consumers,” MacDonald said. “This is an especially hard blow at a time when the housing sector is still struggling to regain its footing and grappling with rebuilding efforts following these natural disasters. Canada and the U.S. need to work cooperatively to achieve a long-term, stable solution in lumber trade that provides for a consistent and fairly priced supply of lumber.”

The Window and Door Manufacturers Association (WDMA) has urged the U.S. and Canada to return to the bargaining table and resolve the long-running trade dispute.

“The United States and Canada need to enact a new softwood lumber agreement,” said  Kevin McKenney, WDMA’s director of government affairs, in April when the White House first announced that it would seek to imposed the tariffs. “The continued access to raw materials, including lumber, from domestic and imported sources is crucial to a robust housing sector. Both countries need to work cooperatively towards finding a long-term solution that ensures stability in the trade of softwood lumber.”

The petition was filed in November 2016 on behalf of the Committee Overseeing Action for Lumber International Trade Investigations or Negotiations (COALITION), which is an ad hoc association whose members filed the case on behalf of its individual members:  U.S. Lumber Coalition Inc., Collum’s Lumber Products,L.L.C., Hankins Inc., Potlatch Corp., Rex Lumber Company, Seneca Sawmill Company, Sierra Pacific Industries, Stimson Lumber Company, Swanson Group, Weyerhaeuser Company, Carpenters Industrial Council, Giustina Land and Timber Company and Sullivan Forestry Consultants Inc.

“We are pleased the U.S. government is enforcing our trade laws so that the U.S. lumber industry can compete on a level playing field,” said U.S. Lumber Coalition co-chair Jason Brochu, who is also co-president of Pleasant River Lumber Company. “The massive subsidies the Canadian government provides to their lumber industries have caused real harm to U.S. producers and their workers. With a fair-trade environment, the U.S. industry, and the 350,000 hardworking men and women who support it, have the ability to grow production to meet much more of our country’s softwood lumber demand.”

According to the National Lumber and Building Material Dealers Association (NLBMDA), the U.S. lumber industry claims that Canada is unfairly subsidizing its industry through its federal and provincial governments, because the provinces own most timberland in that country. The prices charged to harvest the timber are set by those governments, while prices in the U.S. are mostly set through the open market. American lumber producers, as well as the U.S. government, claim this constitutes an unfair subsidy for Canadian producers and is thus subject to a tariff.

According to the Commerce Department, enforcement of U.S. trade law is a prime focus of the Trump administration. From January 20, 2017, through November 1, 2017, the Commerce Department has initiated 77 antidumping and countervailing duty investigations – a 61 percent increase from 48 in the previous year.

The trade agreement that has governed Canadian imports of softwood lumber since 2006 expired at the end of 2016.

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