The U.S. Commerce Department is cutting tariffs on most Canadian softwood lumber producers in half, but the long-running trade dispute remains as Canada plans to appeal the decision to maintain punitive tariffs. Following an administrative review, the Commerce Department said Thursday it will lower the tariff rate for most Canadian lumber producers to 8.59 percent, down from the current 17.91 percent. The Commerce Department had announced its intentions in January to lower tariffs, proposing a preliminary tariff rate of 11.64 percent and has now further reduced that amount to a final rate of 8.59 percent. Canfor Corp., JD Irving Ltd. and West Fraser Timber Co. Ltd. will pay tariffs at slightly lower levels than other Canadian lumber producers. The new prices are expected to take effect on or after August 10. International Trade Minister Mary Ng said the US tariffs on Canadian lumber are unjustified and unfair. “These duties have caused undue harm to Canadian industry and its workers. They also amount to a tax on US consumers, exacerbating the difficulty of housing at a time of increased supply challenges and inflationary pressures,” she said in a statement. Ms. Ng said Canada plans to oppose the latest tariff rates, including filing an appeal through a dispute settlement process under Chapter 10 of the Canada-US-Mexico Agreement. This pact allows Canada and the US to establish trade commissions to settle the timber dispute. Canada also complained in 2017 to the World Trade Organization about the trade fight that dates back to 1982. The American lumber lobby has repeatedly argued that Canadian producers are dumping softwood lumber into the United States at below market value. “Enforcement of the trade law boosts American manufacturing and results in more lumber being produced in the US by American workers to build US homes,” US Lumber Coalition President Andrew Miller said in a statement Thursday. Most forests in Canada are on Crown land, with forestry companies paying “fees” to provincial governments for the right to log. The US Timber Coalition argues that the US has a better system for attracting competitive bids for private timber rights, based on market forces. Canada counters that no subsidies have been given to Canadian producers and that no dumping has occurred in the US market. Under the new tariff schedule, Vancouver-based Canfor will see its tariff drop to 5.87 percent, from the current 19.54 percent. Vancouver-based West Fraser Timber will pay an interest rate of 8.25 per cent, up from 11.14 per cent, while Resolute Forest Products Ltd.’s new tariff based in Montreal will be 14.86 percent, up from the current 29.66 percent. Saint John-based JD Irving’s rate will be 7.17 percent, compared to 15.05 percent today. The 2006 Canada-US softwood lumber agreement expired in October 2015, without a replacement. In the latest round of the trade dispute, Canadian producers have been paying tariffs on U.S. lumber with prices ranging from April 2017. “While the reduction in tariffs from this third administrative review is welcome, the fact that we must continue to pay tariffs on our lumber products sold in the U.S. market remains disappointing and disappointing,” said the president of the Lumber Trade Council of BC, Susan Yurkovich. a press release. “As US producers remain unable to meet domestic demand, these tariffs continue to hamper the post-pandemic recovery and exacerbate inflationary pressures on both sides of the border.” The chief executives of Canfor and West Fraser said last week they were skeptical about any imminent breakthrough to solve the softwood problem. “It’s very difficult to get this issue on the radar screen of any administration with all the global events going on,” Canfor CEO Don Kayne said during a conference call with industry analysts. Canfor has $660 million in U.S. duty deposits, while West Fraser has $749 million. West Fraser CEO Ray Ferris said he is optimistic that Canadian lumber producers will eventually recover the vast majority of tariffs, but there is an impasse in the cross-border dispute. “There doesn’t really seem to be anything substantial happening to move this forward,” he told analysts. CIBC Capital Markets Inc. estimates that Canadian producers have paid deposits for U.S. tariffs totaling nearly $5.8 billion since 2017. The Commerce Department’s latest move is based on scrutiny from 2020, when lumber traded mostly between $320 and $960 per 1,000 board feet during a period of wild price swings. Two-by-fours made of western spruce, pine and fir recently sold for nearly $685 per 1,000 feet, compared with record highs of $1,617.50 in May 2021, according to Madison-based industry newsletter Lumber Reporter Vancouver. Provincial cabinet ministers in British Columbia and Ontario criticized the Commerce Department’s decision to maintain the tariffs. “These tariffs make housing and lumber more expensive,” according to a news release from the BC government. The Ontario government has argued that the US is unfairly targeting Canada’s forestry sector. “Together with provincial governments, the federal government and industry leaders across the country, Ontario stands united in support of Canada’s forest industry and free trade,” the Ontario government said in a statement. Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox morning or night. Sign up today.
