Increased tariffs on Canadian lumber by 20 worth 1 billion
The United States has fired the opening shot in a latest softwood-lumber war against Canada, with the Trump administration announcing its first batch of duties on imported wood in the neighbourhood of 20%.
The move was expected: the historic dispute over lumber pricing has led to once-a-decade trade skirmishes over the issue, resulting in American duties, then the inevitable court battles, and ultimately negotiated settlements.
What wasn’t expected Monday was the enthusiasm with which the new American administration flung itself into the lumber hostilities, touting its incoming countervailing duties as an example of U.S. President Donald Trump’s tough, America-first trade posture.
Trump underscored the impending move by announcing it to a gathering of conservative media on the eve of the expected announcement. Commerce Secretary Wilbur Ross also highlighted it in an interview.
Then came a statement that said U.S. Customs will begin collecting cash deposits from Canadian logging companies because they receive a range of subsidies — most of them allegedly about 20%.
“It has been a bad week for U.S.-Canada trade relations,” said Ross, in a statement that went out of its way to link this dispute to one involving dairy, and tying it all to broader complaints about NAFTA.
“This is not our idea of a properly functioning free trade agreement.”
This entire dispute will play out amid the backdrop of a bigger trade file — the renegotiation of the North American Free Trade Agreement. Neither lumber nor dairy are part of the current NAFTA, and different actors would want to add provisions on one or the other.
What comes after Monday’s countervailing duties is a study of possible anti-dumping duties, followed by a final determination by the U.S. Commerce Department as early as Sept. 7, and ultimately one of three possible outcomes: an agreement, a surprise retreat from the U.S. government, or a potential years-long court battle.
Canada’s government condemned the announcement. In a statement, the federal government called the move unfair, baseless, unfounded and it promised help for its industry.
“The Government of Canada strongly disagrees with (this) decision to impose an unfair and punitive duty,” said Natural Resources Minister Jim Carr. “The accusations are baseless and unfounded.”
He said the action hurts people in both countries — not only Canada’s lumber sector that employs hundreds of thousands, but also American home-buyers, who must now pay more for wood.
The buildup to this new lumber war began with the 2015 expiry of a decade-old agreement. It stems from a fundamental, long-standing dispute over whether Canadian companies’ access to public land constitutes a subsidy.