Resolute bemoans rising cost of spats

A Canadian timber company caught in the crosshairs of two trade disputes with the U.S. said it will be forced to fork over as much as US$75 million a year in duties while it tries to fight back against the measures.

Montreal-based Resolute Forest Products Inc., the world’s largest newsprint maker, will pay about US$50 million a year after the U.S. levied a 12.8 per cent import tariff on the company’s softwood lumber, chief executive Richard Garneau said Thursday. That’s in addition to as much as US$25 million in tariffs it’s already paying after the U.S. imposed a duty on its shipments of supercalendered paper, the glossy type used in magazines and newspaper inserts. “It’s a very difficult issue we have to deal with and it’s affecting our cash flow,” Garneau said.

The long-running dispute between Canada and the U.S. over softwood lumber escalated last month when President Donald Trump announced tariffs on shipments from Canada. Canada’s lumber producers called the duties unfair and vowed to fight the decision.

Garneau said the dispute over the “baseless” tariffs could still be resolved as the U.S. needs to import lumber from north of the border.

Resolute and New Brunswick-based J.D. Irving Ltd. are also appealing the duties on specialty paper of as much as 20 per cent, which the U.S. imposed in 2015 amid allegations that Canadian companies were receiving unfair subsidies.

Resolute shares tumbled as much as 8.5 per cent in Toronto, their biggest intraday decline since Feb. 16, after the company reported an unexpected first-quarter loss excluding one-time items of 33 cents per share. Resolute cited smaller newsprint shipments.

Garneau expects the impact on Resolute and the Central Canadian lumber sector will be quick, with a reduction in sawmill shifts that will have a cascading effect on other jobs.

Resolute has 1,200 people working to support two supercalendered paper mills and 4,000 people in its lumber operations.

Garneau declined to say how many workers could be affected.

Unifor, which represents 24,000 forestry workers at 134 companies, fears duties will hurt 25,000 Canadian jobs, punishing small communities dependent on the forest industry.