The U.S. Department of Commerce plans to raise tariffs for Canada’s two largest lumber companies, while lowering duties on most other Canadian producers.
Based on the Commerce Department’s preliminary assessment, the combined countervailing and anti-dumping duties will rise for West Fraser Timber Co. Ltd. and Canfor Corp. CFP-T, both based in Vancouver.
West Fraser, Canada’s largest lumber producer, faces having to pay a new duty rate of 9.38 per cent, likely taking effect by August or September, compared with its current tariff of 8.25 per cent. Canfor will see its tariff climb to 7.29 per cent for Canadian softwood sold in the United States, compared with the current 5.87 per cent.
“With these preliminary results, the U.S. Department of Commerce has indicated its intention to maintain its unjustified duties on imports of Canadian softwood lumber. This is a disappointing decision to many on both sides of our shared border,” International Trade Minister Mary Ng said in a statement on Tuesday.
Saint John-based J.D. Irving Ltd., which recently ranked as Canada’s fifth-largest lumber producer, has been assessed a higher rate of 7.77 per cent, compared with the current 7.17 per cent.
While West Fraser, Canfor and Irving have been singled out for higher tariffs, most other producers in Canada will see their duty rates decline to 8.24 per cent from the current 8.59 per cent.
Montreal-based Resolute Forest Products Ltd. has a current tariff of 14.86 per cent, but it will be included in the group of Canadian producers with the revised rate of 8.24 per cent. Paper Excellence Group, a private company controlled by Indonesia’s wealthy Widjaja family, plans to acquire Resolute for US$1.6-billion by mid-2023.
The 2006 Canada-U.S. softwood agreement expired in October, 2015, with no replacement. In the latest round of the long-running trade dispute, Canadian producers have been paying U.S. lumber duties since April, 2017.
The latest rates are subject to verification by the Commerce Department.
Most forests in Canada are on Crown land, with forestry companies paying “stumpage fees” to provincial governments for the right to log. The U.S. Lumber Coalition argues that the U.S. has a better system for soliciting competitive bids for private timber rights, based on market forces.
The coalition has repeatedly argued that Canada subsidizes lumber production and dumps softwood into the U.S. at below market value.
“Continued enforcement of U.S. trade laws against unfairly traded Canadian lumber will maximize long-term domestic production and lumber availability produced by U.S. workers to build U.S. homes,” coalition chairman Andrew Miller said in a statement on Tuesday.
Canada counters that its producers get no subsidies, and they have not been dumping into the U.S. market.
“Canada has long been an essential supplier to the U.S. market, and these unjustified duties continue to act as a tax on American consumers, increasing building costs at a time of surging inflation,” Ms. Ng said.
The Canadian government is challenging the lumber tariffs in a process under the U.S.-Mexico-Canada Agreement that allows Canada and the U.S. to set up trade panels to settle disputes. As well, Canada complained in 2017 to the World Trade Organization in the trade fight that dates back to the early 1980s.
The Commerce Department’s latest move is based on scrutinizing data from 2021, when lumber traded for more than US$1,600 for 1,000 board feet in the spring during a period of volatile price swings. Consumers were initially keen on do-it-yourself projects, but lumber demand faltered and prices fell in the second half of 2021 as COVID-19 pandemic restrictions eased.
Two-by-fours made from Western spruce, pine and fir sold last week for US$374 for 1,000 board feet, compared with US$670 just six months ago, according to Vancouver-based industry newsletter Madison’s Lumber Reporter.