Exploring the Effects of Increased Tariffs on Canadian Lumber Imports

The clash between Canada and the U.S. over softwood lumber, which dates back to 1982, is one of the most persistent trade disputes between the two countries.

On August 19, the U.S. Department of Commerce raised tariffs on imports of Canadian softwood lumber products from 8.05% to 14.54% following its annual review of existing tariffs.

The U.S. government has long accused Canada of engaging in unfair trade practices, asserting that Canadian softwood lumber products are subsidized by the Canadian government and then sold in the U.S. at less than fair value.

These practices, according to U.S. officials, distort the U.S. softwood lumber market to the detriment of U.S. sawmills, their employees, and local communities.

The latest review by the Commerce Department has confirmed increased levels of what it describes as “unfair trade,” suggesting that these practices are exacerbating existing market challenges. Some industry experts say the U.S. sawmill industry is facing severe pressure, leading to mill closures and layoffs.

As with most disputes, there are strong viewpoints on both sides of this tariff situation. For this article, LBM Journal offered both sides the opportunity to state their case.

Point: In favor of tariffs

Speaking in support of the tariff increase, Andrew Miller, CEO of Stimson Lumber and chairman of the U.S. Lumber Coalition—representing a coalition of U.S. softwood lumber producers—released a statement saying in part, “This even higher level of unfair trade by Canada could not have come at a worse time for domestic producers. Lumber demand and prices are at record lows and mills across the country are struggling to keep afloat.”

In its press release, the U.S. Lumber Coalition says that the increased levels of unfair trade confirmed by the Commerce Department makes it obvious that Canadian unfair trade practices are making a bad situation worse by accelerating and deepening market downcycles, resulting in today’s extreme low lumber prices, forcing U.S. mill closures and layoffs.

“The United States does not need the unfairly traded Canadian lumber imports to supply current levels of home construction,” added Miller. “What American mills, workers, and timberland holders need is the continued strong enforcement of the U.S. trade laws that help facilitate a level playing field. That is how we retain production and availability of lumber produced by U.S. workers to build U.S. homes,” Miller summed up.

The press release concluded: “The U.S. lumber industry established its right to the imposition of antidumping and countervailing duties in the face of unfair competition from Canada, and the Coalition supports the Commerce Department’s continued commitment to enforce the U.S. trade laws against subsidized and unfairly traded Canadian lumber imports.”

Counterpoint: Against tariffs

The National Association of Home Builders (NAHB) strongly disagrees. Alex Strong, NAHB’s senior federal legislative director states: “The tariffs on Canadian softwood lumber are acting as a tax on American home builders and home buyers, making housing less affordable for American families and forcing builders to look overseas to other markets, in order to meet demand.”

“These tariffs on Canadian imports are particularly acute when lumber prices overall are high, which they have been since mid-2020. That is why it is imperative that the Biden administration focus its efforts on working with Canada to develop a long-term solution to the trade dispute that will ensure American home builders and consumers have access to a reliable supply of softwood lumber at competitive prices,” he continues. “Any long-term solution should necessarily include a U.S.-Canada settlement regarding the current anti-dumping duties and countervailing duty cases and the overall legal challenges associated with the current softwood lumber dispute.”

In its official statement, the Canadian government declares: “Canada is extremely disappointed that the U.S. Department of Commerce has significantly increased its unfair and unwarranted duties on softwood lumber from Canada, from 8.05% to 14.54%. Baseless and unfair U.S. duties on softwood lumber unjustifiably harm consumers and producers on both sides of the border. This latest measure will negatively impact workers and their communities. U.S. consumers and businesses that need Canadian lumber will bear the burden of these duties, making housing even less affordable for Americans.”