U.S. sets duties on Canadian lumber; Canada responds

November 2, 2017 LBM Journal

The U.S. Commerce Department announced that it has found that imports of Canadian softwood lumber have been unfairly subsidized and dumped in the U.S. The announcement escalates a trade dispute between the U.S. and Canada.

In its findings, the Commerce Department determined that exporters from Canada have sold softwood lumber the United States at 3.20% to 8.89% less than fair value. The department also determined that Canada is providing unfair subsidies to its producers of softwood lumber at rates from 3.34% to 18.19%.

“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 Ross in a statement. “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.”

Canada responded with a statement from Chrystia Freeland, Minister of Foreign Affairs, and Jim Carr, Minister of Natural Resources, saying, “The Canadian forest industry sustains hundreds of thousands of good, middle class jobs across our country, including in rural and Indigenous communities. The Government of Canada will continue to vigorously defend our industry against protectionist trade measures. Our forest sector is innovative, environmentally responsible and globally competitive – and it represents 7% of our exports and contributes $22.3 billion to Canada’s GDP…We urge the U.S. Administration to rescind these duties, which harm workers and communities in Canada. These duties are a tax on American middle class families too, whose homes, renovations and repairs will only be more expensive. Further, it is clear the tariffs are worsening the lumber supply problem in the United States and forcing U.S. home builders to look overseas to meet their demand for lumber.”

“We will forcefully defend Canada’s softwood lumber industry, including through litigation, and we expect to prevail as we have in the past. We are reviewing our options, including legal action through the North American Free Trade Agreement and the World Trade Organization, and we will not delay in taking action,” the Canadian statement reads.

The National Association of Home Builders issued a statement from Chairman Granger MacDonald siding closer with Canada’s views.

“Today’s move by the Commerce Department to impose duties averaging 20.83% on Canadian lumber shipments into the U.S. could not have come at a worse time. 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.

“This is particularly disappointing given that NAHB met recently with Commerce Secretary Wilbur Ross to express our concerns on this 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. 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

“Lumber is a major component in new home construction and one-third of the lumber used in the U.S. last year was imported. The bulk of the imported lumber—more than 95%—came from Canada.

Most Canadian firms will pay a combined AD/CVD rate of 20.83% which is less than the preliminary combined rate of 26.75%, the National Lumber and Building Materials Distribution Association (NLBMDA) said. For the five companies (Canfor, J.D. Irving, Resolute, Tolko, and West Fraser) directly involved in the investigation, they will pay a combined rate that is different. Canfor will pay 22.13%, J.D. Irving will pay 9.92%, Resolute will pay 17.9%, Tolko will pay 22.07%, and West Fraser will pay 23.76%.

Lumber prices have increased over the past year in part because of the duties placed on Canadian softwood lumber imported to the U.S. The Random Lengths Framing Lumber Composite price is now $433 per thousand board feet, an increase of 24% over the past year. The increase has been even more significant for the panel market. The Random Lengths Structural Panel Composite price is now $527 per thousand board feet, an increase of 42% over the past year.

“NLBMDA urges both sides to work together to reach a new agreement on the longstanding softwood lumber dispute as quickly as possible,” said Jonathan Paine, President & CEO of the NLBMDA. “Duties are a lackluster substitute for a long-term agreement that would bring much needed stability and predictability to the pricing and availability of softwood lumber in the United States. It is time for serious discussions by policymakers to resolve this issue once and for all. The longer this dispute lasts the greater the burden there will be on the affordable housing community, which is already in crisis.”

 

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