A lumber yard near Vancouver on July 6, 2022.JENNIFER GAUTHIER/The Globe and Mail
U.S. President Donald Trump is proposing to introduce tariffs globally on softwood lumber in April, broadening the scope of threatened levies beyond Canada to also hit Europe.
The U.S. Department of Commerce already imposes duties against lumber shipments from Canada into the United States.
On Wednesday night, Mr. Trump added lumber and forest products to the list of global goods targeted for tariffs.
“I’m going to be announcing tariffs on cars, and semi-conductors and chips, and pharmaceuticals – drugs and pharmaceuticals – and lumber probably, and some other things over the next month or sooner,” he said at a Miami conference.
“If they don’t make their product in America, then they very simply – they have to pay a tariff. But if they do make their product in America, they don’t have to pay any tariff.”
Canadian softwood recently accounted for 24 per cent of total U.S. lumber consumption, compared with nearly 33 per cent in 2016.
The remainder of softwood shipments into the U.S. arrive mostly from Europe.
Vancouver-based Canfor Corp. CFP-T, which has a majority stake in a producer in Sweden, could face new tariffs for Swedish lumber sales into the U.S. market.
The U.S. President has said he plans to slap 25-per-cent tariffs on all goods that the U.S. imports from Canada and Mexico, starting in early March.
Mr. Trump has repeatedly said that the U.S. doesn’t need Canadian resources such as softwood, but trade statistics confirm that lumber shipments headed south of the border from Canada are crucial, said David MacNaughton, Canada’s former ambassador to the U.S.
“It’s all consistent with the same line he’s been using on everything,” Mr. MacNaughton said in an interview on Thursday. “He’s going to put tariffs on.”
There are two types of punitive measures in the Canada-U.S. softwood dispute. 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.
“Is it possible or likely that there will be tariffs on top of the existing lumber duties? Probably,” Mr. MacNaughton said. “It has been hard to pin it down.”
The Commerce Department’s decision on revising anti-dumping duties, expected to be publicly released on Friday, will be preliminary. The anti-dumping duties will be subject to further revisions before a final rate is determined, with an effective date in August.
Most Canadian producers are currently paying 7.66 per cent in anti-dumping duties levied against lumber shipments from Canada into the United States, but that could jump to 20 per cent, trade experts say.
Analysts say combined duty rates imposed on Canadian softwood could more than double later this year and reach 30 per cent. If new tariffs are applied, that would mean a rate of tariffs and lumber duties eventually totalling 55 per cent.
Production has increased at U.S. sawmills, including those owned by companies with head offices in Canada. As well, timber supply constraints in British Columbia have crimped lumber output in the province.
Global Affairs Canada said international panels have consistently ruled in favour of Canada as a fair trading partner.
But in the long-running trade dispute, the U.S. Lumber Coalition has argued that Canadian producers receive unfair provincial softwood subsidies and dump product.
“We anticipate that the U.S. Department of Commerce will soon confirm this egregious dumping behaviour by Canadian lumber producers,” coalition executive director Zoltan van Heyningen said in a statement on Wednesday.
The combined countervailing and anti-dumping duty rate is currently 14.4 per cent for most Canadian softwood producers.
But Vancouver-based West Fraser Timber Co. Ltd., Canada’s largest lumber producer, is currently paying a combined duty rate of 11.89 per cent. The country’s second-largest producer, Canfor, has a duty rate totalling 16.58 per cent.
Saint John-based J.D. Irving Ltd.’s existing countervailing and anti-dumping duty rate is 11.54 per cent, while Vernon, B.C.-based Tolko Industries Ltd.’s levy is 17.27 per cent.