Happy New Year! Thanks for following me along in this space for the past year, and I look forward to the coming one.
Of all the grinding political battles that never seem to have a resolution – federal-provincial disputes over money, interprovincial trade barriers – few are as internecine and enduring as the softwood lumber dispute with the U.S.
The new year promises that that conflict will become even more heavily freighted with rhetoric, penalties, lobbyists, politicians and lawyers. Caught in the crossfire will be thousands of jobs and ordinary consumers, as negotiators for Canada and the U.S. mount the same arguments in this latest round of talks.
But this time, there is the threat of extra tariffs, as promised by U.S. president-elect Donald Trump.
The latest chapter in the saga, known as Lumber V, will drag into 2025, as Canada commences its legal challenge of the fifth U.S. review of Canadian softwood lumber.
Last August, the U.S. Department of Commerce nearly doubled its tariffs on softwood, raising its combined countervailing and anti-dumping duties on most Canadian softwood lumber to 14.54 per cent from the previous 8.05 per cent.
In September, Canada’s International Trade Minister, Mary Ng, called the increases unfair and unjust, “hurting Canadian industry and jobs and increasing housing costs in both countries.”
An agreement between both countries would provide some relief, but that is a unicorn Canada has been pursuing since the last one – Lumber IV, reached in 2006 – expired in October, 2015. The U.S. Commerce Department began imposing duties in 2017 on shipments of Canadian softwood.
Ian Dunn, president and chief executive officer of the Ontario Forest Industries Association, wrote an opinion column on the subject for The Globe and Mail last October and referred to the dispute as “likely the largest global dispute since the end of the Second World War, with origins stretching back to the Jay Treaty of 1794.”
Globe reporter Brent Jang provided an update last week.
The U.S. believes the countervailing and anti-dumping duties are necessary to protect its lumber industry, arguing that Canadian industry is unfairly subsidized because Canadian forests are mostly on public land, where buyers pay “stumpage fees” to provincial governments for the right to log.
Washington argues those fees are too low and give Canadian loggers a competitive advantage over U.S. producers, which harvest timber largely from private lands and bid against each other for the privilege.
Ng has countered that international panels have consistently ruled in favour of Canada as a fair trading partner. The country consistently points out that softwood shipments from Canada remain crucial to filling a U.S. void, because domestic production is unable to meet demand south of the border.
The extra duties have contributed to dire economic conditions for many Canadian lumber producers.
Two smaller companies based in British Columbia, Teal-Jones Group and San Industries Ltd., filed for bankruptcy protection in 2024 under the Companies’ Creditors Arrangement Act. B.C. sawmills that were shut down or had production scaled back in the past year include those owned by major players such as West Fraser Timber Co. Ltd. and Canfor Corp.
Kurt Niquidet, president of the BC Lumber Trade Council, said Canadian sawmills have seen their market share of U.S. lumber consumption steadily eroded. Amid Canadian timber constraints, that share has fallen to an estimated 24 per cent, compared with nearly 33 per cent in 2016.
The situation is unlikely to get better in the short term.
In November, Trump said he would impose 25-per-cent tariffs on all goods imported from Canada and Mexico soon after he takes office in January. Forestry industry experts say there is the risk that tariffs in general, possibly at lower rates than those threatened by the president-elect, could be added on top of the existing U.S. duties on Canadian softwood.
In December, the U.S. Department of Commerce announced it would release its next preliminary duty rates on lumber in early May, 90 days later than originally planned. In a memorandum released Dec. 9, the department said it had received 117 petitions, a record number, from U.S. domestic industries complaining in the 2024 fiscal year about dumping by Canada, and a further 25 petitions have already been received in the first two months of the 2025 fiscal year.
Meanwhile, Canada remains eager for a new accord, one that seems increasingly unlikely.
“Canada remains ready to seek a resolution that would provide the stability and predictability the sector needs to ensure its continued growth and success,” Ng said.
This is the weekly British Columbia newsletter written by B.C. Editor Wendy Cox. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here.