Canadian Lumber Tariffs Now Close to 31% As US Announces Fresh Duties

SEATTLE (Scrap Monster): The US Department of Commerce (DOC) has imposed a second wave of duties on imported Canadian lumber. The decision comes just ahead of the commencement of bilateral talks between the US and Canada on NAFTA. The preliminary duty ranges from 4.59% to 7.72%. This is in addition to the countervailing duty announced during April this year. A final determination on antidumping duty is expected to be announced by DOC during early week of September this year.

The imposition of antidumping duty comes on the heels of the findings of the DOC investigation that exports of Canadian softwood lumber to the US were priced at 4.59% to 7.72% less than fair value. The US DOC has imposed the highest antidumping rate of 7.72% on Canfor Corporation, Canadian Forest Products Ltd., and Canfor Wood Products Marketing Ltd. The rate for Tolko Marketing and Sales Ltd. and Tolko Industries Ltd. is being fixed at 7.53%. West Fraser Mills Ltd. will have an antidumping rate of 6.76%, whereas Resolute Forest Products Canada Inc. enjoys the lowest rate of 4.59%. The rate for all other exporters of softwood lumber is being fixed at 6.87%, US DOC press release said.

The combined duty along with countervailing duties announced earlier, ranges from 17.41% to 30.88%. Earlier in April this year, the DOC had announced its decision to impose CVD tariffs of up to 24%. The highest duty of 24.12% was applied to West Fraser, followed by Canfor (20.26%), Tolko (19.50%) and Resolute (12.82%). All other Canadian exporters were imposed 18.88% duties with the exception of J.D Irving whose duty was fixed at 3.02%.

In accordance with the preliminary antidumping determination, US Customs and Border Protection (CBP) will be instructed to collect CVD cash deposits on imports of lumber, based on these preliminary rates.

The US DOC preliminary investigation has excluded softwood lumber products from the Atlantic provinces of Newfoundland and Labrador, Nova Scotia, and Prince Edward Island from ongoing antidumping and countervailing duty investigations. However, duties will be collected on imports from these provinces until a final decision is issued in September.

Meantime, Canadian Natural Resources Minister Jim Carr and Foreign Affairs Minister Chrystia Freeland expressed deep disappointment over the US decision to impose duties. They termed the duties as “unfair and punitive” and stated that the government will fight the decision through litigation. At the same time, it would also try for a negotiated settlement in the best interest of both the countries. All efforts will be made to vigorously defend Canada’s softwood lumber industry, they added.

The imposition of duties is feared to lead to significant drop in market share of Canadian producers. According to a study conducted by the Montreal Economic Institute (MEI), the market share of Canadian producers which had averaged at 32% in 2016 had dropped to 27% within one month of imposition of countervailing duties. This essentially translates to a loss of $102 million across Canada. The loss in market share is expected to further aggravate with the imposition of second round of duties.