Workers stack and sort as softwood lumber is cut at Groupe Crete, a sawmill in Mont-Blanc, Que., on Jan. 20.Christinne Muschi/The Canadian Press
The U.S. Department of Commerce is proposing to more than double the duty rates charged against most Canadian producers of softwood lumber.
The department said in a decision announced on Friday after an administrative review that it plans to raise duties against most Canadian lumber producers to 34.45 per cent, compared with the current 14.4 per cent.
The latest preliminary determination reflects increases to countervailing duties, after a decision last month to raise anti-dumping duties. The result is a combined hike of nearly 140 per cent being contemplated. The Commerce Department’s preliminary decisions on combined rates will be subject to further revisions before final levies are determined, with an effective date in late summer or early fall.
There are two types of punitive measures in the softwood lumber dispute between the two countries, which has existed for decades but is intensifying under the Trump administration’s trade war with Canada. Anti-dumping duties are imposed because of what the Americans describe as Canadian producers selling softwood below market value; countervailing duties are based on what the U.S. sees as subsidized Canadian lumber.
Under the proposed new schedule for duty rates, Vancouver-based Canfor Corp. CFP-T will see its total levies soar to 46.48 per cent, up from the current 16.58 per cent. Canfor’s higher combined levy consists of 11.87 per cent for countervailing and 34.61 per cent for anti-dumping.
Vancouver-based West Fraser Timber Co. Ltd. WFG-T will pay a rate totalling 26.05 per cent, compared with the existing 11.89 per cent. West Fraser’s higher combined levy consists of 16.57 per cent for countervailing and 9.48 per cent for anti-dumping.
Most other Canadian producers face paying 14.38 per cent for countervailing and 20.07 per cent for anti-dumping, for a total of 34.45 per cent, based on the preliminary determination.
The Commerce Department’s administrative review is based on lumber markets in 2023, when prices were low.
U.S. President Donald Trump signed two executive orders on March 1 that have escalated cross-border trade tensions. One executive order launched an investigation that could result in introducing tariffs globally on softwood imports, and the other is designed to spur lumber production within the United States. The probe into global lumber trade is scheduled to be completed by the end of this year.
“The difficulty in this world of forecasting right now is uncertainty,” Jens-Peter Barynin, chief economist at Vivi Economics, said in an interview on Friday. “Usually, there’s like a certain economic logic to policy decisions.”
B.C. Premier David Eby said during a news conference on Thursday that U.S. consumers need Canadian lumber, as “it helps keep costs down for people.” He added that he’s feeling anxious about the future of the province’s key softwood sector.
Amid timber constraints in Canada, especially in B.C., Canadian sawmills have seen their market share of U.S. lumber consumption steadily erode over the past nine years. But Canadian softwood still accounts for an estimated 24 per cent of American lumber requirements.
The 2006 Canada-U.S. softwood agreement expired in October, 2015. In the latest round of the trade dispute, Canadian producers have been paying U.S. lumber duties since April, 2017.
Canadian forests are mostly on public land, where buyers pay “stumpage fees” to provincial governments for the right to log. The U.S. argues those fees can give companies in Canada an unfair competitive advantage over their American counterparts, which harvest timber largely from private lands and bid against each other for the privilege.
But the Canadian government counters that revisions to the stumpage system over the years were designed to follow the free market, emphasizing that international panels have consistently ruled in favour of Canada as a fair trading partner.