(Washington) Canada’s international trade minister is criticizing the U.S. Commerce Department for nearly doubling tariffs on softwood lumber, calling the move “unfair and unfounded.”
Minister Mary Ng says the United States has significantly increased tariffs on softwood lumber from Canada, from 8.05% to 14.54%.
“The unfair and unfounded duties imposed by the United States on softwood lumber are already harming consumers and producers on both sides of the border,” the minister wrote in a statement.
PHOTO JUSTIN TANG, THE CANADIAN PRESS
Mary Ng, Minister of Export Promotion, International Trade and Economic Development
It is the latest salvo in a bilateral game of trade that Ottawa describes as hampering efforts to improve the cost and supply of housing.
The increase in the combined rate called “for all other businesses” has exasperated the British Columbia government and the industry in this province, which is Canada’s largest producer of softwood lumber, ahead of Quebec.
“We’ve said it from the beginning and we’ll say it again now: the only solution is to end unfair softwood lumber tariffs,” B.C. Forests Minister Bruce Ralston said in a statement Wednesday.
Under the U.S. Tariff Actthe Commerce Department in Washington determines whether goods imported into the United States are being sold at less than their fair value, or whether they benefit from subsidies provided by foreign governments.
In Canada, lumber-producing provinces set the price of stumpage fees for timber harvested on Crown land. American producers, who are forced to pay the going rate for timber harvest, argue that provincial stumpage fees are an unfair subsidy.
Canadian lumber producers have already paid more than $9 billion in tariffs to the United States, which are being held in trust until this dispute is resolved.
The BC Lumber Trade Council in British Columbia says the timing of the measure couldn’t be worse. “The increase will compound the extremely difficult conditions facing B.C. producers and impact manufacturing, jobs and communities across the province,” president Kurt Niquidet said in a statement.
Independent Wood Processors Association of British Columbia President Andy Rielly says the litigation is unfairly hurting small, family-run businesses “who are innocent bystanders in this long-running conflict between U.S. landowners and international lumber companies.”
Its members buy their wood or logs on the open market in the same way as American companies, according to a press release. The association is calling on Ottawa to negotiate a lasting solution.
Conservative Party Leader Pierre Poilievre criticized the Trudeau government for failing to listen to the forestry sector and for failing to defend Canadian lumber at the diplomatic and industry levels in Washington.
The path to CUSMA
A CIBC analyst note on the tariffs says Ottawa or the Biden administration are unlikely to focus on resolving the issue as a “trade dispute” because it is not the primary cause of job losses in the industry in Canada. CIBC says the job losses are more related to lower demand for lumber and fibre constraints in British Columbia.
Ottawa is using the trade challenge route through a special dispute settlement committee provided for in the Canada-United States-Mexico Agreement (CUSMA).
Ottawa has already had success arguing before World Trade Organization dispute settlement panels that its stumpage fee regime cannot be considered a subsidy.
Last year, a panel set up to resolve disputes under the North American Free Trade Agreement (NAFTA) also found that certain aspects of the way the United States calculates customs duties were inconsistent with American federal law.
The fifth administrative review of tariffs, released Tuesday by the U.S. Commerce Department, recommended a rate of 14.54 percent, slightly higher than the “preliminary” rate of 13.86 percent discussed in February.
The new rate will likely be in effect until mid-August 2025, when the rates from the U.S. Commerce Department’s sixth administrative review will kick in.
This increase was welcomed by the American industry, notably by the “US Lumber Coalition”, which believes that the measures taken by Canada accentuate the downward cycles in this lumber market.
“The United States does not need unfairly traded Canadian lumber imports to supply current levels of residential construction,” said Andrew Miller, the coalition’s president, in a statement.
Minister Ng said Wednesday that it was in the interests of both Canada and the United States to find “a lasting solution to this long-standing dispute.”
“We will always fight for the interests of Canadians and continue to use all means available to vigorously defend the workers, businesses and communities that depend on softwood lumber for their livelihoods,” she wrote.