The US Department of Commerce just released plans to raise the duties on Canadian lumber from 14.4% to 34.45%. This decision has recently created a firestorm of controversy from the industry and government leaders. This increase is part of the department’s annual review process and aims to address concerns regarding the Canadian lumber industry’s government subsidies, according to US officials.
The proposed hike, detailed in both published and unpublished filings in the Federal Register, indicates a continuing trend of escalating tensions between the US and Canada over lumber trade. Flickr photo by Jeffrey Mac. On behalf of the US Lumber Coalition, Andrew Miller has argued that Canadian practices are destroying the American market.
“These unfair trade practices are designed by Canada to maintain an artificially inflated US market share for Canadian products and force US companies to curtail production, thereby killing US jobs.” – Andrew Miller, chairman of the US Lumber Coalition
Our nation’s builders are sounding the alarm about the devastating impacts these tariffs will have. They project that the increased duties on lumber and other key homebuilding materials will add an average of nearly $9,200 to the cost of a new home. This estimate is based on recent, readily available data from the National Association of Home Builders. Further broken down from the Wells Fargo Housing Market Index Supplement, March.
Members of the US lumber industry argue that imposing higher duties and new tariffs would create a more level playing field for domestic producers. They emphasize that there is already substantial capacity across the US industry that’s not being fully used. Brochu, co-president of Pleasant River Lumber in Maine, lamented a grim early sign. As a result, his two mills are today running at only 60% capacity.
“We could ramp up fairly quickly,” said Brochu, emphasizing the ability of domestic producers to meet market demands should tariffs increase.
These intended responsibilities are very different from the extra tariffs that Trump has suggested imposing on incoming softwood lumber. About 30% of the softwood lumber consumed in the US is imported from Canada. This has turned out to be a thorny point for each nation.
British Columbia Premier David Eby called the proposed duties “unjustified.” He cautioned that these new duties would only serve to increase housing costs further for American consumers. He argued that such measures would only serve in the long run to limit the availability of affordable housing.
“It can happen fairly quickly,” Brochu added, indicating the readiness of US manufacturers to respond to market needs if tariffs result in increased demand for domestic lumber.
The commentary on these responsibilities continues to make the rounds. It remains to be seen how they will affect future US-Canada trade negotiations. The economic consequences for each country are significant. This is especially critical as housing costs are rapidly increasing across the United States.