Canada to Challenge US Softwood Lumber Duties under CUSMA - Will it Help?
The Canada–U.S. softwood lumber dispute is one of the largest and most enduring trade disputes between both nations, and Canada will now be challenging the United States’ duties on softwood lumber, by taking legal action under CUSMA - another step in Canada’s ongoing defense of its forestry sector.
On August 4, the U.S. Department of Commerce announced that it would be cutting the tariff on most Canadian softwood lumber imports from 17.91 per cent to 8.59 per cent. The new rate is expected to take effect later this month.
Canadian softwood lumber producers will see a reduction in the tariffs they pay at the U.S. border. By lowering the lumber tariff to 8.59 per cent, the current U.S. government is making it cheaper for Canadian companies to export lumber. But despite the lumber tariff being cut in half, the Canadian government is still unhappy with the trade agreement.
The Minister of International Trade, Export Promotion, Small Business and Economic Development, issued the following statement regarding the United States’ unwarranted and unfair duties on softwood lumber from Canada:
“Today, Canada filed notice that it will challenge, under Chapter 10 of the Canada-United States-Mexico Agreement (CUSMA), the final results of the U.S. Department of Commerce’s third administrative review of its anti-dumping and countervailing duty orders on softwood lumber from Canada."
"Canada is disappointed that the United States continues to impose unwarranted and unfair duties on softwood lumber from Canada. The only fair outcome would be for the United States to meet its CUSMA obligations and cease applying unjustified duties on all Canadian softwood lumber products."
“The United States has long relied on competitive Canadian lumber products to meet its domestic needs for high-quality, sustainable and innovative building materials. These unjustified duties on softwood products from Canada not only harm Canadian communities, businesses, and workers, but they amount to a tax on U.S. consumers, affecting housing affordability at a time of supply challenges and inflationary pressures."
“Canada will always defend its softwood lumber industry, the workers, and the communities it supports. Taking legal action under CUSMA represents another step in Canada’s ongoing defense of its forestry sector."
“Canada’s softwood lumber industry is a key driver of economic activity across our country and an essential component of Canada’s forestry sector, which contributed more than $34.8 billion to the country’s GDP in 2021 and employs some 205,000 workers."
“Our government has been consistent in expressing a willingness to work with the United States toward a negotiated solution to this long-standing trade issue that would allow a return to predictable cross-border trade in softwood lumber.”
Will this help bring down the cost of lumber supply? Even if Canada is able to convince the U.S. to reduce or remove the tariff, constraints on lumber supply due to forestation, closure of mills, and natural disasters in Canada may cause prices to remain high due to a diminishing supply.