US affirms final tariffs on Canadian softwood lumber

UPDATE, Dec. 7 — The U.S. International Trade Commission sealed final tariffs on Canadian softwood lumber imports Thursday, according to The Wall Street Journal. The Commission ruled that Canadian imports hurt the U.S. lumber industry, a victory for American mills. Earlier this week, Canada's North American Free Trade Agreement chief negotiator, the Journal reports, told lawmakers that it is unlikely any renegotiated trade deal between the two countries would resolve their dispute.

UPDATE, Nov. 30 — Canadian officials formally opened a case Tuesday at the World Trade Organization over U.S. softwood lumber tariffs, according to Reuters. Already this month, Canada initiated a NAFTA trade challenge against duties concerning $5.66 billion in U.S. lumber imports. Final duties have not yet been implemented, as officials are awaiting a decision from the U.S. International Trade Commission, which is expected next month.

Dive Brief:

The U.S. Commerce Department finalized tariffs on Canadian softwood lumber Thursday, which would add duties of 20% or more to imports, The Wall Street Journal reported.
Those tariffs will go into effect at the end of the month if U.S. trade officials confirm improper subsidies and dumping practices from Canada hurt the U.S. industry.
Both U.S. and Canadian officials say they would prefer to reach a deal on lumber trade in order to circumvent tariffs.

Dive Insight:

The latest development reflects a similar proposal Commerce Department officials made in April that would have applied an average 20% tax on Canadian softwood lumber imports. That decision, made in response to countervailing claims, was expected to create $1 billion in revenue on imports valued at $5 billion annually.

In June, the department said it would impose another set of preliminary anti-dumping duties, ranging from 4.59% to 7.72% on certain imports. Together, the two duties would add 17.41% to 30.88% to the cost of imports.

The dispute follows a decades-long battle between the U.S. and Canada about whether the Canadian government subsidizes its lumber producers, thus enabling them to sell to U.S. consumers at below-market rates. Before the countries' most recent legal tiff expired in October 2015, the deal had extracted anti-dumping and countervailing duties from Canadian softwood lumber imports. That deal required U.S. producers to return a portion of the revenue collected previously, and saw Canadian producers adhere to certain limits when selling to the U.S.

Following the agreement, the countries instituted a one-year moratorium on legal action. During that time, U.S. and Canadian officials intended to reach a new deal on imports — but the deal didn't happen. Instead, U.S. producers continued to echo claims of countervailing and anti-dumping practices made by their Canadian competitors.

Meanwhile, the Trump administration is renegotiating NAFTA with Canada and Mexico. As part of those negotiations, the administration aims to cut a dispute resolution mechanism that reviews the tariffs and trade decisions imposed between NAFTA countries.

U.S. homebuilders have been some of those hardest hit by the ongoing dispute. A survey from the National Association of Home Builders in July found that 21% of single-family builders were having trouble accessing framing lumber; only 7% said the same in July 2015.

Throughout 2017, the possibility of tariffs has inflated U.S. lumber prices. And with approximately one-third of the U.S. softwood lumber market originating from Canada, that rise has pushed the U.S. to look elsewhere to buy the product.