On Tuesday, the U.S. Department of Commerce announced a preliminary 1.9 times increase in the anti-subsidy duty rate on Canadian softwood lumber. The new default rate is currently at 34.45 percent. In practical terms, this decision more than doubles the current 14.54 percent levy. It continues to provoke outraged responses from the highest levels of government in Ontario and British Columbia. Here’s what Ontario officials had to say on Friday after hearing the announcement leaked to the media. They fear the impact this would have on their economy, especially on their large forestry base.
Ontario’s cabinet members, Kevin Holland and Vic Fedeli, highlighted that the province’s forestry industry generated nearly $37 billion in revenue in 2022 and supported over 137,000 jobs. Specifically, they called the new raised taxes “unjustified and punitive measures.” This move will artificially increase the cost of construction in every corner of the province. These leaders contend that these tariffs will impede the much-needed progress in the housing sector and lead to higher costs for consumers in the end.
British Columbia Premier David Eby denounced the U.S. action. He decried it as an attack on forest workers and all people who reside in B.C. Eby stressed that the proposed new duties would be against Canadian interests. He cautioned that they would boost housing prices for Americans by restricting access to cheap lumber.
As the dire circumstances continued to unravel, Eby made the call to bring Prime Minister Mark Carney to the table on Monday. Eby would like to see a more coordinated response to the U.S. tariffs and wants to see a “Team Canada approach” put in place. This strategy protected workers in the automotive and steel industries across Ontario and Quebec. It showed that it can present a united front during trade disputes.
These tariffs are significant because they further a precedent set during former U.S. President Donald Trump’s administration. In fact, he was the one who succeeded in imposing national security tariffs on vehicles imported from Canada. In retaliation, Canada raised a 25 percent tariff on U.S. made vehicles. These vehicles largely did not adhere to the stringent requirements outlined in the Canada-United States-Mexico Agreement.
U.S. determination on softwood lumber duties raises serious questions about U.S.-Canada trade relations. True, both countries’ leaders are indicating they are as much in uncharted economic waters as one would expect given the anarchic wholesale defaults. How Canadian officials respond now could establish a model for how the two countries engage on trade disputes in the years ahead.
