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 plans to nearly triple anti-dumping duty rates against most shipments of Canadian softwood into the United States, announcing its decision only two days after the White House ordered a new lumber investigation.
U.S. President Donald Trump already wants to impose sweeping tariffs on goods that the country imports from Canada and Mexico, saying on Monday that the across-the-board levies will take effect on Tuesday.
In the looming trade war, Canada’s forestry sector is worried that Tuesday’s 25-per-cent tariffs will be layered on top of existing softwood duties, and a fresh tariff from the new investigation will be stacked on top of higher lumber duties later this year.
In its announcement on Monday for preliminary rate revisions, the Commerce Department said it expects to raise anti-dumping duties for most Canadian lumber producers to 20.07 per cent, compared with the current 7.66 per cent.
Two Vancouver-based companies, Canfor Corp. CFP-T and West Fraser Timber Co. Ltd. WFG-T, face different rates of increased duties compared with their current levies.
Canfor, which currently pays anti-dumping duties of 10.44 per cent, saw its revised rate soar to 34.61 per cent.
West Fraser’s anti-dumping duty rate has been hiked to 9.48 per cent in the preliminary determination, compared with the existing 5.04 per cent.
The Commerce Department’s decision will be subject to further revisions before a final anti-dumping rate is determined, with an effective date in August.
“B.C. has long maintained that any and all duties on softwood lumber are unjustified, and these anti-dumping duties are based on a biased calculation,” B.C. Premier David Eby said in a statement on Monday.
There are two types of punitive measures in the protracted 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.
The existing countervailing duty rate is 6.74 per cent for most Canadian softwood producers, so that means the combined countervailing and anti-dumping duty rate currently totals 14.4 per cent.
The Commerce Department did not provide any reason for the delay in releasing the new preliminary rates for anti-dumping duties, which were originally slated to be announced on Feb. 21.
Analysts are predicting that there will be higher countervailing duty rates, with the Commerce Department scheduled to issue a preliminary ruling in May.
The Commerce Department’s administrative review is based on lumber markets in 2023, when prices were low.
Monday’s announcement comes after Mr. Trump ordered a new investigation into softwood lumber that is global in scope but will hit Canada the hardest.
Mr. Trump signed two executive orders on Saturday that escalate cross-border trade tensions.
One executive order launches an investigation that would result in introducing tariffs globally on softwood imports and the other order 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 threatened across-the-board tariffs to take effect on Tuesday would be at a rate of 25 per cent. For Canadian energy resources shipped into the U.S., plans call for tariffs of 10 per cent for commodities such as crude oil, natural gas and critical minerals.
Over the past nine years, U.S. softwood production has risen to account for about 70 per cent of domestic consumption. After Canada’s leading role as a softwood supplier to the Americans, Europe makes up most of the rest of lumber shipments into the U.S.
Canadian softwood recently accounted for 24 per cent of total U.S. lumber consumption, compared with nearly 33 per cent in 2016.
Canada’s lumber industry and Unifor, the country’s largest private-sector union, said separately that Mr. Trump’s executive order that threatened lumber tariffs cited Section 232 of the Trade Expansion Act, allowing him to connect the softwood file with national security.
“To suggest our lumber and byproducts are a threat to American security is ludicrous but Trump is going back to his playbook to twist regulations to continue sustained attacks on the Canadian softwood industry and the jobs that depend on it,” Unifor national president Lana Payne said in a statement.
The U.S. Lumber Coalition welcomed Mr. Trump’s order for a new investigation into softwood. The U.S. President has said that the targeted lumber tariff could be 25 per cent.
“This additional enforcement step against unfair trade taken by President Trump will accelerate addressing the harmful effects of foreign unfair trade practices in lumber,” coalition chairman Andrew Miller said in a statement.
Coalition executive director Zoltan van Heyningen said Monday’s anti-dumping decision is necessary in the fight against Canadian producers.
“The U.S. Lumber Coalition applauds the Trump administration’s strong commitment to enforcing the U.S. trade laws against Canadian unfair trade behaviour that is killing U.S. jobs by suppressing U.S. lumber production,” he said in a news release.
Details remain unclear on how new tariffs on softwood would be applied, which parties would be on the hook for paying them and what the precise implementation dates would be.
“There’s a lot at play right now with the broad-based tariff threat on Canada and Mexico, and then now this new executive order on timber, lumber products and their derivatives,” Kurt Niquidet, president of the BC Lumber Trade Council, said in an interview on Monday. “There’s a lot of balls in the air right now.”
If threatened new tariffs are applied, that would mean a rate of tariffs and softwood duties eventually totalling as much as 80 per cent on Canadian lumber.
David MacNaughton, Canada’s former ambassador to the U.S., said repeated attempts to resolve the cross-border dispute have failed to gain traction.
Two years ago, for example, the chief executive officers of seven major lumber producers in Canada recommended that Ottawa appoint Mr. MacNaughton as a special envoy to mediate a truce.
But the U.S. Trade Representative at the time, Katherine Tai, declined to name an American counterpart in the envoy role.
“Basically, she just said, ‘No, we’re not interested.’ That was because there was no sentiment within the U.S. industry to strike a deal. They were quite happy with the way things were going,” Mr. MacNaughton said in a recent interview.