As expected, Canadian lumber producers were hit earlier this week with additional duties on softwood lumber exported to the U.S. The U.S. Department of Commerce on 26 June approved new preliminary anti-dumping duties in the 7% range against Canadian lumber producers. That’s on top of earlier countervailing duties.
Combined, the countervailing and anti-dumping duties add 27% to 31% to the cost of lumber exported to the U.S. B.C. is Canada’s largest producer and exporter of lumber to the U.S., so the biggest impact is in B.C.
For now, the duties have yet to take any major toll on B.C. companies, thanks to high lumber prices, driven by strong demand in the U.S. and a low Canadian dollar. But eventually, they will begin taking their toll.
In the past, international tribunals have ruled that the American duties are unjustified. But it can take years for such rulings, and in the meantime, some of the less profitable mills are vulnerable, which is why federal and provincial governments prefer to try to negotiate a settlement.
Canada’s current share of the U.S. market has been shrinking. Even so, the U.S. still represents about 50% of B.C. lumber exports, with 30% going to Asia. The new duties being imposed on Canadian lumber might be even more punishing if global lumber prices weren’t so high.
Canada’s largest union in the private sector, representing more than 310,000 workers says that the $867-million forestry industry aid package of announced by the Canadian government in May will help cushion the blow, but it is not a long-term solution.