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 percent on Canadian lumber exports starting this week.
Why are softwood lumber export duties increasing?
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.
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.”
Will duties continue to rise?
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 percent of all exports last year. About 50,000 forest sector employees may be affected, accounting for just under 0.3 percent of total Canadian employment.
Learn More from Cole International
Information provided by: U.S. Customs Brokerage Dept. - Cole International