The U.S. is dramatically increasing the duty it charges on softwood lumber imports from Canada, setting the rate at 14.54 per cent. The previous duty was 8.05 per cent.
The new rate was shared with trade groups and government officials on Tuesday, but was not immediately posted to the U.S. Federal Register.
In a written statement, Mary Ng, minister of export promotion, international trade and economic development, called the increase disappointing.
“Baseless and unfair U.S. duties on softwood lumber unjustifiably harm consumers and producers on both sides of the border. This latest measure will negatively impact workers and their communities,” said Ng.
In British Columbia, Bruce Ralston, minister of forests, echoed Ng’s sentiments.
“I am immensely disappointed with the U.S. Department of Commerce’s decision to increase unfair and unwarranted softwood lumber duties,” said Ralston.
In February, the U.S. Department of Commerce signalled that it planned to significantly increase softwood lumber duties, saying it would set them at 13.86 per cent. Tuesday’s change went even higher than that.
Under the U.S. Tariff Act, the Department of Commerce determines whether goods are being sold at less than fair value or if they’re benefiting from subsidies provided by foreign governments.
In Canada, lumber-producing provinces set so-called stumpage fees for timber harvested from Crown land, a system that U.S. producers — forced to pay market rates — consider an unfair subsidy.
Canada is formally initiating a challenge of what it’s deemed ‘unwarranted and unfair’ U.S. duties on Canadian softwood lumber under the U.S.-Mexico-Canada trade agreement’s dispute resolution system.
On Tuesday the U.S. Lumber Coalition, an industry group, claimed the Department of Commerce’s rate decision “substantiates that Canada continues to subsidize and dump its softwood lumber products in the United States.”
The coalition said in a statement that Canadian practices distort the U.S. softwood lumber market, affecting sawmills, their employees and communities in the United States.
“Lumber demand and prices are at record lows and mills across the country are struggling to keep afloat,” said Andrew Miller, chairman of the coalition.
Kurt Niquidet, president of the B.C. Lumber Trade Council, said the U.S. Lumber Coalition’s claims were without merit. He also called the decision to nearly double the duty on Canadian softwood lumber disappointing.
“It’s very hard, right? B.C. is a high-cost producer. We’re facing a number of challenges and this is just adding the cost of shipping lumber to the U.S. So it’s going to impact production, it’s going to impact workers and communities that depend on the forest sector,” said Niquidet.
Niquidet, Ralston and Ng all vowed to challenge the U.S. decision with litigation under the North American Free Trade Agreement (NAFTA) and the Canada-United States-Mexico Agreement (CUSMA) at the U.S. Court of International Trade and at the World Trade Organization.
“It is in the best interests of both Canada and the United States to find a lasting resolution to this long-standing dispute,” said Ng.