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Softwood lumber exports slapped with new duties

Posted by Customs Brokerage Department - Cole International on May 1, 2017 9:00:00 AM
An investigation by the U.S. Commerce Department concluded this week that Canadian softwood lumber is unfairly subsidized. As a result, the U.S. will levy countervailing duties of up to 24 per cent on Canadian lumber exports starting this week.

These high duties are being employed to “level the playing field” - offsetting the effect of allegedly underpriced exports due to subsidization. The Commerce Department investigation reasoned that, because most Canadian timber is harvested on Crown land (versus mostly private land in the U.S.), with provincial governments effectively subsidizing the prices, Canadian lumber is unfairly priced lower than the U.S. product.
 
Softwood lumber exports
In an April 24 press release, the U.S. Lumber Coalition stated, in part, "Left unchecked, Canadian non-market based trade practices would yield ever increasing market share for Canadian product, displacing U.S. producers, workers, and landowners, and even allowing Canadian mills to take over U.S. assets.”
 
Unfortunately, this latest announcement may be just the beginning. A second Commerce Department investigation, to be completed in late June, may result in antidumping duties also being levied.
 
It's unclear what longer-term impact these new duties will have on trade between the two countries as the full impact of the new duties won't be felt for several months.
 
In 2016, imports of softwood lumber from Canada were valued at an estimated $5.66 billion (U.S.). Lumber accounted for 1.2 per cent of all exports last year. About 50,000 forest sector employees may be affected, accounting for just under 0.3 per cent of total Canadian employment.
 
See our December 2016 blog for some background on countervailing and antidumping duties.
 
For the latest on the changes in U.S. trade rules and how they may affect you, email Cole’s trade professionals today.
 
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Information provided by: U.S. Customs Brokerage Dept. - Cole International