The United States soon will increase currently higher existing duties on softwood lumber imported from Canada. This ruling deepens an extensive history of trade tensions between the two countries. The US Department of Commerce has just announced its decision to increase these open-ended anti-dumping and countervailing duties, from 14.4% up to 34.45%. It’s important to note that this decision is part of an annual review process and not related to other proposed tariffs on softwood lumber.
The US Lumber Coalition has battled tooth and nail for a more equitable marketplace. In an opinion piece, Chairman Andrew Miller asserts that by increasing duties, USITC will help level the playing field for domestic producers. In their defense, the coalition argues that higher duties are necessary to stop what the coalition claims are Canada’s unfair trade practices.
“These unfair trade practices are designed by Canada to maintain an artificially inflated US market share for Canadian products and force US companies to curtail production, thereby killing US jobs.” – Andrew Miller, chairman of the US Lumber Coalition
This latest duty increase comes after two years of contentious negotiations on softwood lumber. For over 40 years, there have been several cycles of retaliatory tariffs and trade talks. Thirty percent of all softwood lumber consumed in the US is imported. Canada continues to rule this market, supplying more than 80 per cent of those imported goods.
Photo courtesy of NSB Jason Brochu, co-president of Pleasant River Lumber in Maine, noted how much more domestic production was possible. His company owns and controls two small mills in Maine, which are currently operating at a meager 60% capacity.
“We could ramp up fairly quickly.” – Jason Brochu, co-president of Pleasant River Lumber in Maine
Lumber industry in the US already has acute existing underutilized capacity. The increase in planned duties will ensure that domestic producers can better meet market demand. This transformation will further decrease our dependence on Canadian imports.
The consequences of higher duties go further than producers. Building industry experts project that tariffs on lumber and other key homebuilding materials could increase the average price of a new home by. The March National Association of Home Builders/Wells Fargo Housing Market Index report estimates the cost increase to be $9,200.
Brochu acknowledged that while the industry could increase production rapidly, the impact of these changes on homebuilding costs remains a concern.
“It can happen fairly quickly.” – Jason Brochu, co-president of Pleasant River Lumber in Maine
Tensions are escalating between the US and Canada over a contentious trade issue. Stakeholders on both sides of the border have been watching closely to see how these latest developments will play out and impact the softwood lumber market and housing affordability.
