The duties are designed to give American producers relief from what the US sees as Canadian subsidies ©123RF
The duties are designed to give American producers relief from what the US sees as Canadian subsidies ©123RF

US hits Canada with timber tariffs

26 April 2017

The US has applied tariffs to Canadian softwood imports to protect domestic suppliers, it has announced.

Wilbur Ross, US secretary of commerce, said his department had decided there was a need to impose duties worth US$1bn on softwood from Canadian forests, which are state-owned. “This is not our idea of a properly functioning free trade agreement,” he said.

Canada has called the tariffs “unfounded” and said increasing timber prices had already added US$3,600 to the cost of a new home in the US this year.

The level of duties, designed to provide American producers with relief from what the US sees as Canadian subsidies, will be between 3.01% and 24.12% of Canadian softwood imports, depending on the mill.

Canada said most lumber mills would be hit by a 19.88% tariff.

The move aligns with president Donald Trump’s “Buy America, Hire America” policy of promoting domestic business, and coincides with an outburst on Twitter from the president over Canadian dairy exports. “Canada has made business for our dairy farmers in Wisconsin and other border states very difficult,” Trump tweeted. “We will not stand for this. Watch!”

Ross said: “It has been a bad week for US-Canada trade relations.”

Jim Carr, Canada’s minister of natural resources, said this was the fifth trade dispute over lumber in the last 30 years. “We have prevailed in the past and will do so again,” he said. 

“Our government disagrees strongly with this decision. It is unfounded and we will vigorously fight for the interests of the Canadian softwood lumber industry… These unfair and punitive duties will negatively affect people’s jobs on both side of the border.” 

Carr quoted statistics from the US National Association of Home Builders that estimated lumber price increases in the first quarter this year had added $3,600 to the price of a new home in America.

World Bank statistics say Canada exported US$18.9bn of wood to the US in 2015, by far its largest export market for the material. The next largest destination is China, which imports US$3.9bn.

In 2015 the US imported a total of US$325.4bn worth of goods and services from Canada, and exported US$337.3bn, making Canada its second largest trading partner. In the trade of goods alone, the US had a trade deficit of $15bn with Canada.

Canada was already taking actions to mitigate the effect of the tariff increases, said Carr. These steps include promoting the use of Canadian wood domestically and helping the industry access new foreign markets.

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