The United States on Thursday announced plans to slap hefty tariffs on softwood lumber imports from Canada, further raising tensions among the two nations amid contentious North American Free Trade Agreement (NAFTA) talks.
The Commerce Department determined that Canadian lumber producers benefited from selling into the United States below fair value and received unfair subsidies that hurt U.S. producers.
{mosads}“While I am disappointed that a negotiated agreement could not be made between domestic and Canadian softwood producers, the United States is committed to free, fair and reciprocal trade with Canada,” said Commerce Secretary Wilbur Ross.
The United States and Canada have been working on a long-term deal to manage the softwood lumber trade, a prolonged prickly trade issue between the two economic partners.
U.S. lumber interests backed the decision for a tariff averaging 20.83 percent on Canadian lumber imports.
“We are pleased the U.S. government is enforcing our trade laws so that the U.S. lumber industry can compete on a level playing field,” said Jason Brochu, co-chairman and co-president of the U.S. Lumber Coalition.
“The massive subsidies the Canadian government provides to their lumber industries have caused real harm to U.S. producers and their workers,” Brochu said.
In a joint statement, Canadian Minister of Foreign Affairs Chrystia Freeland and Minister of Natural Resources Jim Carr called the decision “unfair, unwarranted and deeply troubling.”
“We will forcefully defend Canada’s softwood lumber industry, including through litigation, and we expect to prevail as we have in the past,” Freeland and Carr said.
“We are reviewing our options, including legal action through the North American Free Trade Agreement and the World Trade Organization, and we will not delay in taking action,” they said.
Any lumber agreement is expected to remain outside of a final NAFTA deal.
Canadian Prime Minister Justin Trudeau told Canadian media that he didn’t expect the softwood lumber decision to affect the ongoing NAFTA negotiations, which have been rocky at best.
“We have kept the decisions and the discussions around softwood separate from discussions on NAFTA, but obviously every different aspect of our deep and broad relationship with the United States comes into the conversation that we have regularly,” Trudeau said, according to CBC News.
The U.S. International Trade Commission will decide on Dec. 18 whether the tariffs will take effect because the American industry has been damaged.
Senate Finance Committee ranking member Ron Wyden (D-Ore.) praised the decision.
“With today’s action by the Commerce Department, American lumber mills and millworkers are one step closer to getting hard-won relief against subsidized and dumped Canadian softwood lumber,” Wyden said.
“This administration must fully enforce America’s trade laws, not just for the mills and workers in Oregon and across the country, but for the communities that depend on them,” Wyden said.
Canadian firms have sold softwood lumber the United States at 3.20 percent to 8.89 percent less than fair value, the Commerce Department determined. Canada also is providing unfair subsidies to its producers at rates from 3.34 percent to 18.19 percent.
In 2016, imports of softwood lumber from Canada were valued at an estimated $5.66 billion.
The lumber issue has created a feud between the lumber and home building industries.
Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas, said the Commerce Department decision could not “come at a worse time.”
“Home builders and home owners are already dealing with the monumental rebuilding efforts in the aftermath of the devastating hurricane season and California wildfires,” MacDonald said.
“This tariff only adds to the burden by harming housing affordability and artificially boosting the price of lumber,” MacDonald said.
“It is nothing more than a thinly disguised tax on American home buyers, home builders and consumers.”
More than 95 percent of all imported lumber came from Canada last year.
“Canada and the U.S. need to work cooperatively to achieve a long-term, stable solution in lumber trade that provides for a consistent and fairly priced supply of lumber,” MacDonald said.