The U.S. Increases Duties on Canadian Softwood Lumber Imports by Almost 100%

The U.S. government has not yet officially posted this decision, but it was communicated to trade groups and government officials.

The U.S. is nearly doubling the duty on Canadian softwood lumber imports, increasing the rate to 14.54% from the previous 8.05%. This new anti-dumping and anti-subsidy rate will be applied retroactively to exports made in 2022 and will affect new exports of softwood lumber products to the U.S.

The U.S. government claims that Canadian softwood lumber is imported and sold in the United States at less than fair value (LTFV). To address U.S. concerns about unfair subsidies, the 2006 Softwood Lumber Agreement (SLA) was signed between the U.S. and Canada.

The 2006 SLA expired in 2015, and with that, the dispute resurfaced and led to new rounds of tariffs and litigation. Efforts to negotiate a new agreement have been unsuccessful so far.

Under the Tariff Act, the Department of Commerce determines whether products are being sold below fair value or if they are receiving subsidies from foreign governments. U.S. producers see the Canadian system of setting stumpage fees for timber harvested from Crown land as an unfair advantage.

The stumpage fee dispute

The issue of stumpage fees is at the heart of the softwood lumber trade dispute between the U.S. and Canada. It is also the primary driver behind the U.S. imposing higher duties on these goods, as American producers seek to level the playing field.

Stumpage fees in Canada are the charges that provincial governments charge companies for the right to harvest timber from Crown land, which makes up a significant portion of Canada’s forested areas. These fees are based on factors such as the type of timber, the quantity harvested, and market conditions.

In contrast, in the U.S., most timber is harvested from privately owned land where prices are determined by the open market. The U.S. argues that Canada's system of administratively set stumpage fees gives Canadian producers an unfair advantage, as it allows Canadian companies to sell lumber in the U.S. at lower prices.

An annual U.S. review of AD/CVD

The U.S. Department of Commerce conducts an annual review of its anti-dumping (AD) and countervailing duty (CVD) orders on softwood lumber imports. As part of this process, it initiated a review of these orders on March 14, 2023, and issued preliminary results on February 1, 2024.

On August 13, 2024, Commerce released its final results, setting a new combined duty rate of 14.54% for most softwood lumber exports from Canada. 

Moreover, this morning, the U.S. published a Federal Register notice announcing that producers and exporters of certain Canadian softwood lumber products received countervailable subsidies from January 1, 2022, through December 31, 2022, during the period of review (POR).

The U.S. Lumber Coalition welcomes the duty increase

Andrew Miller, Chairman of the U.S. Lumber Coalition and CEO of Stimson Lumber, welcomed the increased duties on Canadian softwood lumber imports, stating, “This couldn’t come at a better time for domestic producers.” 

He emphasized that U.S. mills are struggling to stay open with lumber demand and prices at record lows.

Miller also highlighted that the Department of Commerce’s decision reinforces the need to address Canada’s unfair trade practices, which he believes are worsening the situation for U.S. producers. 

“The United States doesn’t need unfairly traded Canadian lumber imports for current home construction,” Miller added. “Strong enforcement of U.S. trade laws is essential to maintaining a fair market and supporting American mills and workers.”

Canada criticizes the new duties on softwood lumber

Canadian officials expressed disappointment with the significant duty rate increase on Canadian softwood lumber. Mary Ng, Canada’s Minister of Export Promotion, International Trade, and Economic Development, issued a statement where she called the increase “baseless and unfair,” stating that it would hurt consumers and producers on both sides of the border.

“This latest measure will negatively impact workers and their communities. U.S. consumers and businesses that need Canadian lumber will bear the burden of these duties, making housing even less affordable for Americans,” she said.

Provincial ministers have also condemned the duty increase. In an official news release, Bruce Ralston, B.C. Minister of Forests, echoed NG’s concerns, calling the decision “unfair and unwarranted.” 

“The evidence is clear: Duties on Canada’s softwood lumber exports cannot be justified. That’s why, alongside the Government of Canada, we will continue to pursue litigation under North American Free Trade Agreement, the Canada-United States-Mexico Agreement, the U.S. Court of International Trade and at the World Trade Organization,” he said. 

Additionally, Andrew Mercier, Minister of State for Sustainable Forest Innovation, said, “While we work to create opportunities for forestry workers and communities, we will redouble our efforts alongside the Government of Canada, our provincial partners and the forest sector to end unfair duties that are hurting people.”

B.C. Lumber Trade Council’s response

Kurt Niquidet, president of the B.C. Lumber Trade Council (BCLTC), voiced strong opposition to the U.S.’s decision to increase duties on Canadian softwood lumber imports. He warned that the new duty rate would intensify the already challenging conditions for B.C. lumber producers.

“These duties continue to be unjustified and unfair,” Niquidet stated. He noted that the increased tariffs would raise the cost of lumber in the U.S., worsening affordability issues for consumers and threatening jobs and manufacturing operations in British Columbia.

B.C. is the largest Canadian exporter of softwood lumber to the U.S., and the forest industry plays a crucial role in the province’s economy. This industry supports approximately 100,000 direct and indirect jobs. The BCLTC represents the majority of lumber production in the province and continues to advocate for B.C. producers in the ongoing trade dispute.

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