Posted August 5, 2022

U.S. Cuts Softwood Tariffs by Half for Canadian Lumber

Tariff drops from current 17.91 percent to 8.59 percent.

The U.S. Department of Commerce is lowering tariffs against most Canadian softwood producers by half, but the long-running trade dispute lingers as Canada plans to appeal the decision to maintain punitive duty rates.

After an administrative review, the Commerce Department said Thursday it will decrease the duty rate for most Canadian lumber producers to 8.59 per cent, compared with the current 17.91 per cent.

The Commerce Department had made its intentions known in January to reduce tariffs, proposing a preliminary duty rate of 11.64 per cent, and has now reduced that amount further with the final rate of 8.59 per cent.

Canfor Corp., J.D. Irving Ltd. and West Fraser Timber Co. Ltd. will pay tariffs at slightly lower levels than other Canadian lumber producers. The new rates are slated to take effect on Aug. 10 or soon after.

International Trade Minister Mary Ng said U.S. duties on Canadian lumber are unwarranted and unfair.

“These duties have caused unjustified harm to the Canadian industry and its workers. They also amount to a tax on U.S. consumers, exacerbating housing unaffordability at a time of increased supply challenges and inflationary pressures,” she said in a statement.

Ms. Ng said Canada plans to oppose the latest tariff rates, including by filing a challenge through a dispute-settlement process under Chapter 10 of the Canada-U.S.-Mexico Agreement. That pact allows Canada and the U.S. to set up trade panels to settle the lumber dispute. As well, Canada complained in 2017 to the World Trade Organization in the trade fight that dates back to 1982.

The American lumber lobby has repeatedly argued that Canadian producers dump softwood into the United States at below market value. “Trade law enforcement boosts American manufacturing and results in more U.S. lumber being produced by U.S. workers to build U.S. homes,” U.S. Lumber Coalition chairman Andrew Miller said in a statement Thursday.

Most forests in Canada are on Crown land, with forestry companies paying “stumpage fees” to provincial governments for the right to log. The U.S. Lumber Coalition argues that the U.S. has a better system for soliciting competitive bids for private timber rights, based on market forces.

Canada counters that there have been no subsidies given to Canadian producers and no dumping into the U.S. market has occurred.

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