The U.S. Commerce Department today announced new preliminary anti-dumping duties on Canadian softwood lumber imports of 20 per cent.
Canadian softwood lumber producers already pay 14.4 per cent, on average, in anti-dumping and countervailing duties.
The duties won’t become final until August, when final determinations are expected to be made.
“It is deeply disappointing that the U.S. continues to impose these protectionist trade measures” said Kurt Niquidet, president of the BC Lumber Trade Council.
“The fact remains that the United States relies on Canadian softwood lumber imports and these duties will harm not only the B.C. forestry industry, but also U.S. consumers, who will bear some of the cost”.
Today’s release of the new preliminary duties is just the first shot across the bow in what is expected to be a nasty trade war, with additional tariffs that may be layered on top of duties.
"Today's announcement comes amidst U.S. President Donald J. Trump's threat to put a 25 per cent tariff on all products exported from our country to the United States, compounding the challenges for this important industry in B.C.," said B.C. Premier David Eby.
"It also follows the U.S. President's order this past weekend to initiate another, separate investigation of forest products, with the possibility of additional tariffs, quotas or other actions aimed at curbing imports of forest products to the U.S. These are unwarranted attacks, and not how allies treat each other."
Anti-dumping and countervailing duties have been in place on Canadian softwood lumber at varying levels since 2017, following the expiration of the last softwood lumber agreement in 2015.
The duties on Canadian softwood lumber have been effective in shrinking Canada’s market share of the American lumber market.
According to the Forest Resources Association in the U.S., Canadian softwood lumber imports have declined from about 35 per cent of the American market in 2016, to about 24 per cent as of the end of 2024.
The industry now faces the prospect that broad-based tariffs of 25 per cent on all Canadian imports, except energy, could be layered on top of softwood lumber duties.
“Forestry’s in a unique position in the sense that we’ve already got duties on,” Niquidet told BIV News. “And our understanding is, if these tariffs get applied, then it would be additive. So it would be quite punitive on the forest sector. So we’d be impacted in an outsized manner compare to other sectors.”
There are some differences between duties and tariffs.
Duties are held by the U.S. Treasury, pending appeals through trade tribunals like the World Trade Organization, and sometimes remitted back to the companies that paid the duties.
In total, Canadian forestry companies have paid a total of $10 billion in duties since 2017. Canada is currently appealing the duties through the Canada-U.S.-Mexico Trade Agreement (CUSMA).
Tariffs, on the other hand, are border taxes. In principle, it’s the buyer – the importer – who has to pay the tax, which means American buyers will have to pay more for Canadian lumber.
So with spruce-pine-fir lumber selling at US$480 per thousand board feet, buyers would have to pay US$600 per thousand board feet, when subject to 25 per cent tariffs.
In practice, however, exporters may have to eat some of those taxes in order to preserve market share.
“They’re going to be able to pass on, I think, in the early days, probably two-thirds of the tariff because supply and demand is going to be tight,” said wood markets consultant Russ Taylor. “Inventories in the field are relatively low. There isn’t a surplus of inventory, so they’re going to have to, at some point, buy Canadian lumber.”
He imagines some volatility in prices over the coming months.
“I think individual companies are going to do their own thing. I think some may actually go off the market, and wait and see what happens to the price. There’s always going to be some company out there that’s will to cut the price to get an order today and keep running.”
Anti-dumping and countervailing duties have been levied on Canadian softwood lumber by the U.S. Department of Commerce off and on for decades, based on its findings that Canadian softwood lumber is subsidized because most of the trees harvested to produce it come from public lands (i.e. Crown land). Most of the lumber milled in the U.S. come from trees grown on private forest lands.
Basically, the duties are based on calculations of selling products below the cost of production.
“For many times of the year, you’re selling below the cost of production and the U.S. calls that dumping,” Taylor said.
