A recent investigation by the United States Department of Commerce has concluded that softwood lumber imported from Canada’s foresting industry are unfairly subsidized. As such, Canadian lumber imports can soon expect to face serious new international duties and these duties could range from three percent to 24 percent.
Known as countervailing duties, this strategy intends to keep the playing field more level when one country believes that another country’s product has unfair subsidies. Apparently, the US lumber industry has argued this for decades, commenting that most Canadian timber is harvested on Crown lands and, thus, prices are set and regulated by the provincial government (resulting in cheaper lumber).
US Lumber Coalition legal chair Cameron Krauss comments, “Today’s ruling confirms that Canadian lumber mills are subsidized by their government and benefit from timber pricing policies and other subsidies which harm U.S. manufacturers and workers.”
Accordingly, in a press release, Monday, the US Lumber Coalition said: “Left unchecked, Canadian non-market based trade practices would yield ever increasing market share for Canadian product, displacing U.S. producers, workers, and landowners, and even allowing Canadian mills to take over US assets.”
With that, then, US president Donald Trump states that there will now be a 20 percent tariff added to all softwood lumber coming into the United States from Canada. On that note, too, the US dollar pushed up even further than it had been from the volatile Loonie.
The coalition goes on to note that measures at the border which restrict subsidized Canadian lumber imports are “essential.” Otherwise, they warn, “differences between the U.S. mostly private and Canadian mostly public timber sales systems give Canadian producers an unfair cost advantage that injures U.S. producers and their workers.”
Of course, Canada is quick to remind that its national governments have changed operations in order to address these types of concerns. Timber auctions, for example, are now utilized more as a means to reflect current market rates.
Indeed, a joint statement made by the Canadian Natural Resources minister, Jim Carr and the Foreign Affairs Minister, Chrystia Freeland, attest: “The government of Canada disagrees strongly with the U.S. Department of Commerce’s decision to impose an unfair and punitive duty. The accusations are baseless and unfounded.”