The Other Side of the Fence

Cost of Canadian Lumber Up 27%

Posted by Andrew Knott on Aug 16, 2017 11:14:25 AM

Canadian softwood lumber imports have been hit with two separate tariffs by the U.S. Commerce Department. 

A 19.88% countervailing duty was announced in April, followed by a 7% anti-dumping duty in June. The U.S. imported $5.7 billion in softwood lumber last year alone, mainly for residential home building.

Canadian lumber now faces average duties of about 27%, a measure that will largely affect American homeowners looking to repair, renovate or build.

The U.S. and Canada have been at odds over softwood lumber since the 19th century, and the conflict continues to flare up because of fundamental differences in forestry ownership. In the U.S., forest lands are largely held by lumber companies. In Canada, they tend to be owned by the government. This means that in Canada, the prices charged to harvest the timber (stumpage fees) are set administratively, rather than through the competitive marketplace, like in the U.S.

U.S. lumber representatives say that enforcing fair trade laws and leveling the playing field could increase employment domestically. The Canadian government and lumber industry have disputed the increase, stating that Canadian lumber is provided to such a wide range of industries, and that lack of specificity makes it ineligible to be considered a subsidy under U.S. law.

According to the National Association of Homebuilders, the new tariffs could increase output for U.S. producers, but they would also add $1,236 to the price of an average single-family home and lead to a loss of nearly $500 million in wages for American workers.

Although not yet signed, a ten year Canada – U.S. Softwood Lumber Agreement is in negotiations. The SLA would end the present case, to be replaced with volume restrictions in the form of a quota, but without export surcharges. Instead of export surcharges, volume violations would receive significant penalties.

You can read more on the latest developments in the U.S. - Canada lumber trade issue at Random Lengths, an independent publisher of forestry-market data.

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