The U.S. Department of Commerce increased its combined countervailing and anti-dumping duties on most Canadian softwood lumber to 14.54 per cent from the previous 8.05 per cent.ANDREJ IVANOV/AFP/Getty Images
Canadian lumber industry and government officials say they will defend the country’s economic interests as they seek a resolution after the U.S. Department of Commerce nearly doubled its tariffs on softwood in the latest chapter of the long-running trade fight.
Washington on Tuesday raised its combined countervailing and anti-dumping duties on most Canadian softwood lumber to 14.54 per cent from the previous 8.05 per cent.
The increased duty was not markedly higher than a preliminary assessment of 13.86 per cent in February, which at the time came as a surprise, said Kurt Niquidet, president of the BC Lumber Trade Council (BCLTC).
The U.S. is imposing the higher tariffs as the industry struggles with a fragile North American economy, marked by weak demand for new housing construction and renovation. Indeed, in announcing its second-quarter results this week, Home Depot Inc. warned investors the home improvement slump will result in lower sales for the full year.
B.C. loggers, meanwhile, have been restricted by land-use policies limiting their access to timber, Mr. Niquidet said.
“That combination of weaker demand and fibre supply constraints in British Columbia have made it very challenging. Then, adding on the higher duty rates just increases the cost to our main market,” he said.
The U.S. lumber lobby has long argued that Canadian producers receive unfair provincial subsidies on softwood and dump product in the United States at below-market value, and the U.S. government has responded by imposing the duties.
Canadian International Trade Minister Mary Ng said she was extremely disappointed by the action of the country’s largest lumber customer, calling it “baseless and unfair.” She said the duties will not only hurt domestic producers and the communities in which they operate, but also U.S. consumers and businesses that rely on Canadian lumber.
“It is in the best interests of both Canada and the United States to find a lasting resolution to this long-standing dispute,” she said in a statement.
Ms. Ng pointed out Ottawa is litigating the U.S. measures under several international pacts, including the North American Free Trade agreement, the Canada-United States-Mexico Agreement, the U.S. Court of International Trade and the World Trade Organization.
Softwood disputes have marred the trade relationship between the two allies since the early 1980s. In the most recent chapter, the U.S. Commerce Dept. started imposing tariffs on Canadian lumber in 2017. The latest tariff increase was a result of its fifth administrative review, which is based on lumber exports in 2022.
The U.S. says its measures are aimed at protecting its own lumber industry, arguing that Canadian forests are mostly on public land, where buyers pay stumpage fees to provincial governments for the right to log. That, the U.S. says, gives Canadian loggers a competitive advantage over American companies, which bid against each other for the right to harvest timber from private lands.
Canadian federal and provincial governments, as well as producers, disagree with that characterization, and say the actions harm the exporters by the imposition of the duties and the time and costs of legal challenges. Global Affairs Canada has said international panels have consistently ruled in favour of Canada as a fair trading partner.
BCLTC said the higher duties represent a departure from the U.S. government’s traditional methods of calculating duties and will hit consumers on both sides of the border.
It pointed out that Canadian lumber producers have paid $9-billion in duties since 2017, and those are held in deposit until the trade dispute is settled. “Unfortunately, the delays in the appeal process have made it increasingly difficult for this to happen in a timely fashion, and these delays must be addressed and resolved,” the council said.
B.C.’s government said Premier David Eby has spoken to the U.S. ambassador to Canada to call for an end to the duties and press the case that the two countries should instead seek mutual opportunities to lower costs for consumers.
The provincial government said it is also looking to increase demand for B.C. softwood within Canada and in other markets as it seeks to push back against the U.S. duties.