U.S. plans to double duties on imports

The U.S. Department of Commerce issued new preliminary rulings on antidumping tariffs on Canadian softwood lumber imports that would double the current duties if implemented.

Commerce's International Trade Administration has calculated a preliminary duty of 18.32 per cent, but the current 8.99-per-cent rate remains in place, because a final determination hasn't been made, a Commerce official said. The final antidumping and countervailing duties differ from the initial calculation as comments and case briefs are taken into account.

We find the significant increase in today's preliminary rates troubling.

The determination will only come later in the year.

A push to double tariffs on wood imports comes as U.S. demand outstrips supply in a time of surging residential construction, causing lumber prices to more than triple in the past year. The National Association of Home Builders has urged Washington to negotiate a new trade deal with Canada to secure supplies and halt further hikes.

“We find the significant increase in today's preliminary rates troubling,” Susan Yurkovich, president of the BC Lumber Trade Council, said in a statement. “It is particularly egregious given lumber prices are at a record high and demand is skyrocketing in the U.S . ... ”

The unwarranted tariffs will ultimately further hurt American consumers by adding to their costs, said Yurkovich, whose organization represents lumber producers in British Columbia.

The two nations have had decades of disagreement over the issue, with the U.S. alleging its northern neighbour unfairly subsidizes lumber production. In 2019, the World Trade Organization said the U.S. violated international trade rules in the way it calculated tariffs on Canadian imports of softwood lumber. The combined rate — which the U.S. first instituted in January 2018 — was cut to 8.99 per cent from 20.23 per cent in November.

The U.S. Lumber Coalition, which represents producers across the country, welcomed the preliminary ruling.

“A level playing field is a critical element for continued investment and growth for U.S. lumber manufacturing to meet strong building demand to build more American homes,” Jason Brochu, co-chair of the coalition, said in a statement.

Canadian lumber producers should see reduced profitability later in Q4 as duty rates more than double to levels a bit higher than expected, CIBC analyst Hamir Patel said in a note.