Canada’s timber industry is finding U.S. duties and tariffs hard to overcome
Though President Donald Trump announced on Monday a new 50% tariff on a wide range of Canadian goods, softwood and lumber were not among the items facing new charges.
The news was a win for the National Association of Home Builders (NAHB), which has continued to urge the president to exempt building materials from tariffs because they raise the cost of housing, impede supply chains and increase uncertainty for home builders.
But Zoltan van Heyningen, executive director of the U.S. Lumber Coalition, a group representing an alliance of softwood lumber producers, has a different view of the matter, saying that Canada’s trade practices and industry subsidies continue to hurt the U.S. timber industry’s ability to compete.
“Asking the United States to absorb unfairly traded lumber driven by Canada’s massive excess lumber capacity and unprecedented levels of subsidies is outrageous,” van Heyningen said in a press release Monday. “It comes at a devastating cost to U.S. workers, their companies and their forestry dependent communities.”
Despite dodging the recent tariff increase, Canadian lumber remains subject to a series of duties and earlier tariffs that may be helping the U.S. timber industry compete while increasing the cost of housing.
Currently, Canadian timber companies are subject to a 20.56% antidumping duty and a 14.63% countervailing duty, which is imposed on Canadian timber companies that have benefited from national subsidies. Those duties, which are meant to help create a level playing field, increase the cost of timber from Canada by 35.16%.
In addition to the duties, the Trump administration last October added a 10% tariff on Canadian timber and lumber imports, bringing the increased cost of lumber to 45.16%. A 25% tariff was also placed on certain upholstered wooden furniture, kitchen cabinets and vanities.
The October tariffs will remain in place until Jan. 1, 2027, unless blocked in court. But that may not be easy. The 10% Canadian tariff was implemented under Section 232 of the Trade Expansion Act of 1962. The Supreme Court ruled in February that the Trump administration could not use another act — the International Emergency Economic Powers Act — to impose tariffs on trading partners. But the court has not yet ruled on Trump’s ability to use the Trade Expansion Act to impose tariffs. Trump used a third piece of legislation, the Tariff Act of 1930, on Monday to impose the 50% tariffs on Canadian goods.
As for the changing size of the timber tariffs, news services reported in April that the U.S. Department of Commerce had signaled plans to lower the duties on Canadian lumber, slashing antidumping duties to 10.66% from the current rate of 20.56% and countervailing duties to 14.17% from the current 14.63% rate. That would bring the duty rate down to 24.83% from the current level of 35.16%. A final determination isn’t expected until late August.
Last October’s 10% tariff would be added to any revised duty rate. If the Department of Commerce goes through with plans to reduce levies on Canadian lumber, the new combination of duties and tariffs is expected to be 34.83%.
NAHB estimates that tariffs on softwood lumber and derivative products such as cabinets and vanities could drive up the cost of a new home by as much as $10,900.
At the same time, van Heyningen of the U.S. Lumber Coalition believes that the efforts by the Trump administration to enforce trade laws are reducing the amount of Canadian lumber coming into the U.S. and helping to strengthen U.S. lumber suppliers.
“Through strong trade law enforcement and Section 232 tariffs, President Trump has achieved historically low market shares for unfairly traded Canadian lumber in the U.S. market — down from 35% to an average of 19%,” van Heyningen stated Monday.
