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The U.S. Department of Commerce issued its preliminary determination in the second administrative review of Canadian softwood lumber imports, and if finalized, would result in tariffs being doubled, from 8.99 percent to 18.32 percent.

The department’s recommendation to more than double the “all others” preliminary countervailing and anti-dumping rate to 18.32 percent on Friday drew sharp criticism from the Canadian government and its industry, but applause from the lumber industry in the United States.

According to Kevin Mason, managing director of ERA Forest Products Research, the increase in the tariff shouldn’t result in higher lumber prices because they have more than doubled in the past year.

“Prices are supply-and-demand driven,” he said. “(Tariffs) drive the cost up for producers but it’s not going to affect prices.”

According to a press release from the U.S. Lumber Coalition, the department concluded that Canadian imports are “heavily subsidized and dumped into the U.S. market by issuing a combined anti-subsidy and anti-dumping rate of 18.32 percent.”

However, the U.S. Lumber Coalition said the U.S. lumber industry is open to a new U.S.-Canada softwood lumber trade agreement “if and when Canada can demonstrate that it is serious about negotiations.”

B.C. Minister of Forests, Lands, Natural Resource Operations and Rural Development Katrine Conroy and B.C. Minister of State for Trade George Chow released a statement in response:

“B.C. is frustrated and very concerned about the continued effect these unjustified punitive duties are having on our forest sector and on the families in communities throughout B.C. whose livelihoods depend on it.

The statement also pointed out that not only would higher duties hurt B.C. and Canadian businesses, they will also hurt American home buyers. The statement also stressed the importancem of keeping supply lines open as we move into a post-coronavirus economy.

“We need open and stable supply chains for both countries to prosper during recovery, not trade barriers,” reads the statement.

According to CBC Canada, in a note to investors, RBC analyst Paul Quinn said finalized rates from the previous administrative review process wound up being largely in line with the preliminary rates.

“We think higher rates will incentivize producers to push harder for a resolution to the softwood lumber dispute, which could unlock significant cash,” he said, noting an estimate that collected tariffs from Canadian producers on deposit add up to more than $4 billion.

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