The U.S. Department of Commerce has released preliminary findings from its fifth annual review of duty orders on Canadian softwood lumber, suggesting an increase in tariffs from the current 8.05% to 13.86%. This review, which encompasses anti-dumping (AD) and countervailing duties (CVD), was published on February 1, 2024. The results are preliminary and will not take effect until the final results are issued in the summer of 2024.
The proposed increase has sparked significant reaction from both sides of the border. Canadian Minister of Export Promotion, International Trade, and Economic Development, Mary Ng, expressed profound disappointment, stating that the increased duties would detrimentally affect industries, workers, and communities in Canada, as well as make housing less affordable in the United States. Minister Ng emphasized that Canada would continue to defend its interests through all available legal avenues, including litigation under the North American Free Trade Agreement (NAFTA), the Canada-United States-Mexico Agreement (CUSMA), the U.S. Court of International Trade, and the World Trade Organization (WTO).
Conversely, the U.S. Lumber Coalition has welcomed the Commerce Department’s decision. Andrew Miller, Chairman of the Coalition and CEO of Stimson Lumber, voiced support for the duties, arguing they are crucial to counteract what he described as unfair subsidies and trade practices by Canadian producers. Miller stressed that the duties are essential for sustaining free and fair trade, allowing U.S. businesses to compete on a level playing field.
Since the initiation of trade cases in 2016, the U.S. lumber industry has reported considerable growth, with an increase in production capacity aimed at meeting the domestic demand for building materials. This expansion, according to industry representatives, has resulted in an additional output of approximately 26 billion board feet of lumber by the end of 2023, averaging 3.7 billion board feet annually.
The ongoing tariff dispute highlights the complex dynamics of international trade between the U.S. and Canada, particularly in the lumber sector. The issue affects a wide range of stakeholders, from producers and workers to consumers, particularly in sectors like housing where softwood lumber is a critical material.
As discussions continue, both nations have expressed a willingness to negotiate a new bilateral softwood lumber agreement. However, progress has been hindered by the lack of a unified position within Canada’s lumber industry, which is necessary for initiating government-to-government negotiations. Until such an agreement is reached, the U.S. Lumber Coalition insists on the strong enforcement of U.S. trade laws to address what it considers unfair Canadian trade practices in the softwood lumber market.
The final determination by the U.S. Department of Commerce in the summer will be a critical next step in this ongoing trade dispute, potentially reshaping the landscape of North American lumber trade.
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