Softwood lumber tariff battle continues
The United States is escalating the ongoing trade war with Canada over softwood lumber, according to the National Lumber and Building Material Dealers Association (NLBMDA).
Earlier this week, the U.S. Department of Commerce announced that it is increasing tariffs on Canada’s two largest timber companies, West Fraser Timber Co. and Canfor Corp,, while maintaining duty rates on other Canadian businesses that range from 7.29% to 9.38%.
West Fraser’s current duty rate of 8.25% will increase to 9.38%, while Canfor’s rate of 5.87% will rise to 7.29%.
The new rates, which will take effect in August or September after a final review is completed, were filed by the Commerce Department following its fourth administrative review of anti-dumping and countervailing duty orders on softwood lumber products from Canada.
Canadian Trade Minister Mary Ng issued a statement calling the tariffs an unjustified “tax on American consumers that increases building costs at a time of surging inflation,” and vowed to pursue legal avenues under both the U.S.-Mexico-Canada Agreement (USMCA) and the World Trade Organization.
In a prepared statement, the NLBMDA said that it is heavily lobbying trade officials in the Biden Administration and the Commerce Department to pursue a long-term agreement with Canada that eliminates tariffs and brings stability to the supply and pricing of softwood lumber.
The softwood lumber tariffs are the legacy of a decades-long trade dispute over the structure of Canada's timber industry that intensified when the 2006 U.S.-Canada Softwood Lumber Agreement expired in October 2015.
In the latest round of the ongoing trade dispute, Canadian producers have been paying U.S. lumber duties since April 2017, leading to a decline in Canada’s market share for softwood lumber in the U.S., falling from 33% in 2016 to 26% in 2022.
The 2006 Softwood Agreement capped Canada’s market share in the US at 34%, but the U.S. timber industry has lobbied for a revised system that would include quotas to limit Canada’s market share to 20%.
The tariff remains a punitive tax on American consumers that weakens the U.S. housing market and prevents access to affordable homeownership by destabilizing the lumber supply chain, the NLBMDA said.
The association also noted that U.S. builders continue to get more than a quarter of their softwood lumber from Canada and have been hit with exorbitant tariffs that have fluctuated unpredictably since 2017.