SOFTWOOD HARDBALL
Tariffs blasted as ‘egregious’
Steep tariffs imposed on Canadian softwood lumber exports to the United States are not expected to create immediate problems for B.C. sawmills because demand remains robust and prices are high.
That short-term reality, however, hasn’t quelled concern in forestry communities and among industry workers.
There is not likely to be any immediate fallout because the tariff has already been absorbed in the price of lumber in the U.S. due to a 30 per cent rise in the past three
months, Interfor president and CEO Duncan Davies said Tuesday during an industry news conference.
Canadian producers are also helped by a Canadian dollar that is much lower than the U.S. currency, as lumber is priced in U.S. dollars.
“For us, (the new tariff is) a negative on our business, but the real loser in all of this is the U.S. home builder and the U.S. consumer,” said Davies, who is also the chairman of the lumber trade council.
However, Davies said while many large firms like his own are in good financial shape to weather the duties in the short term, he is concerned about smaller operators who don’t have large cash reserves.
B.C. Lumber Trade Council president Susan Yurkovich said: “We don’t know what the actual impact on the B.C. industry in total will be — and we expect there will be some over time. It depends how long the dispute will go on.”
The lumber trade council represents major producers in B.C., including West Fraser, Canfor and Tolko, assigned individual preliminary duties of 24.12, 20.26 and 19.5 per cent, respectively. Other B.C. companies have been assigned a duty of 19.88 per cent. West Fraser and Canfor declined to comment Tuesday and Tolko did not respond to a request for comment.
More than half of B.C. softwood lumber exports go to the U.S. The remainder largely go to Japan and other countries in Asia.
The U.S. Commerce Department levied preliminary duties on Monday, which will be in place for four months. An anti-dumping duty could also be imposed in June, followed by final tariffs by the end of the year.
Tariffs are expected to be collected at the border beginning next week. With the exception of major companies such as West Fraser, Canfor and Tolko in B.C., other companies have also been paying retroactive tariffs for the past 90 days, a new move by the U.S.
“It’s egregious,” said B.C.’s lumber trade envoy David Emerson, a former federal cabinet minister and former Canfor CEO. “We are going to have to fight very, very hard and aggressively.”
He said there may be some potential for retaliation, but he would not offer specifics.
The move to levy tariffs was expected because the decades-long dispute has resulted in a major clash every 10 years, with tariffs issued, legal battles — including under the North American Free Trade Agreement — and eventually negotiated settlements.
The politically powerful U.S. lumber lobby is again arguing that timber pricing and the publicly owned timber system in Canada constitutes a subsidy to our lumber industry. Most timber in the U.S. comes from private land.
However, Davies said logs cost more in B.C. than they do in many regions in the U.S.
Prince George Mayor Lyn Hall said that even though tariffs were expected, it comes as a shock to northern B.C.’s largest community.
The city and its immediate surrounding area is home to half a dozen sawmills. Across the province, lumber production employs 60,000 direct workers.
“The reality sets in,” Hall said. “Even in the short term, it’s concerning. It’s the uncertainty — what happens next?”
Workers at Partap Forest Products in Maple Ridge are also worried by the latest iteration of the long-running trade dispute.
Supervisor C.J. Saini said he expects front-line workers to be let go because the extra duties increase the cost of the wood beyond the ability for people to purchase it in the United States.
“Definitely, there will be job losses,” Saini said. “I don’t want to scare any people, but it is always the front-line people first.” The mill employs 100 people. B.C. Liberal Leader Christy Clark made a campaign stop at the Maple Ridge mill on Tuesday ahead of next month’s provincial election.
Clark said the province will prepurchase B.C. lumber for local housing projects to help keep domestic demand up, but that would only be a drop in the bucket. B.C. shipped $4.55 billion worth of softwood lumber to the U.S. in 2016.
“We will fight and we will win,” Clark said.
She said she hopes U.S. President Donald Trump’s administration will come to the table when he realizes the trade dispute will result in job losses and unaffordable lumber products that hurt consumers on both sides of the border.
Clark has been criticized by NDP Leader John Horgan for not treating the issue with the urgency it deserves.
On Tuesday, Clark said she will make permanent the softwood lumber envoy office in Washington, D.C., that is currently staffed by Emerson.
Horgan said he would personally visit the U.S. capital within 30 days should he win the election.
“I don’t understand how the premier can sit idly by,” he said, citing U.S. visits by Saskatchewan Premier Brad Wall and Alberta Premier Rachel Notley.
B.C. Green Leader Andrew Weaver also took aim at Clark’s Liberals over the softwood file, saying Clark’s move to call a special cabinet meeting Tuesday in response was nothing but theatre.
“The provincial government should have ensured that B.C.’s interests were front and centre on softwood lumber,” he said in a statement.