Canada Lumber Set to Pay Less U.S. Duties as Trade Spat Drags On

(Bloomberg) -- The U.S. is setting duties on Canadian softwood lumber that would effectively lower the punitive tariffs on most producers as the long-simmering trade dispute drags on.

Average preliminary anti-dumping and countervailing duties of nearly 12% will be levied on Canadian softwood lumber producers, the U.S. Department of Commerce said Tuesday in an email. The move follows the government's decision in late 2021 to raise the combined duty rates on shipments from Canadian companies. Producers such as Canfor Corp. will see combined duty rates drop from nearly 20% to 6.75%, and Resolute Forest Products Inc. will pay duties of 20%, down from nearly 30%. West Fraser Timber Co. will see its rates rise to 13% from about 11%.

The final decision on rates won't be known until August, and Canadian producers will be paying average rates of 18% until then, according to British Columbia's Lumber Trade Council.

``We continue to hope that the U.S. industry will put an end to this decades-long litigation and instead work with us to meet demand for the low carbon wood products the world wants,'' BC Lumber Trade Council CEO Susan Yurkovich said Tuesday in a statement.

The Trump administration slapped tariffs on Canadian softwood lumber in 2017, saying Canada's industry is unfairly subsidized. While the move supports U.S. producers, it also adds costs for domestic builders who get more than a quarter of their lumber from their northern neighbor. The U.S. raised rates on Canadian lumber imports in 2021 even as an unprecedented rally lifted prices to record highs during a pandemic-fueled home-building and renovation boom.

An index of framing composite has more than tripled since late August, adding to the cost of an average new home. Lumber futures pulled back in January, signaling that soaring costs and transport bottlenecks will crimp demand. Canada is the world's largest softwood lumber exporter and the U.S. is its biggest market.

``The U.S. Department of Commerce is indicating with these preliminary results that it intends to maintain its unjustified duties on imports of Canadian softwood lumber,'' International Trade Minister Mary Ng said in a statement, noting duties hurt forestry sector business and workers across Canada. ``They are a tax on American consumers and reduce the affordability of housing for American homebuyers at a time when housing prices are already at record highs.”

The Biden administration's move to reduce tariffs is an important step to addressing America's ``housing affordability crisis,'' Chuck Fowke, chairman of the National Association of Home Builders, said in a statement. Swings in the lumber market have added more than $18,600 to the price of a new home since late summer, and the industry is urging the U.S. to negotiate with Canada on a new softwood lumber agreement to eliminate duties, he said.

Commerce Secretary Gina Raimondo said Tuesday at a Senate hearing that she supports finding a lasting solution for the Canada softwood lumber issue to end the need for anti-dumping and countervailing duties.