With the supply chain for building materials clogged, Canadian exporters and United States importers of softwood lumber want the Biden administration to do something about the U.S. tariffs imposed on that commodity. That’s especially so since President Joe Biden announced on October 31 that the U.S. would ease tariffs on European steel and aluminum, and Commerce Secretary Gina Raimondo, on a press call, said that agreement “will provide relief in the supply chain,” that it’s “good for American manufacturers,” and that it will “lower costs and create more jobs.”
That prompted Chuck Fowke, chair of the National Association of Home Builders, (NAHB), to complain, “What about cost relief for millions of American home buyers who have seen costs rise by tens of thousands of dollars over the past year?” He blamed that on “unprecedented lumber price volatility fueled by tariffs on Canadian lumber.” The U.S. imports nearly one-third of its lumber requirements from Canada.
“Until a long-term solution can be reached,” Fowke added, “the administration needs to suspend duties on all imported building materials and goods, including Canadian lumber.”
The dispute over tariffs on Canadian softwood lumber, which goes back at least to 2002, when the U.S. imposed countervailing and anti-dumping duties on the commodity, was exacerbated earlier this year when the Commerce Department, following a review, nearly doubled duty rates on Canadian lumber to a total of 18.32%, in a preliminary ruling. Those new rates have yet to be finalized.
Domestic producers credit the tariffs for “robust U.S. sawmill investment and capacity expansion” since 2016. According to Jason Brochu, co-chair of the U.S. Lumber Coalition, the U.S. industry produced an additional 11 billion board/feet of lumber during that time, enough to build 730,000 single-family homes.
Much of that additional production took place in U.S. sawmills that were bought by Canadian forest companies, according to Brian Menzies, executive director of British Columbia’s Independent Wood Processors Association (IWPA). One of those Canadian companies was Western Forest Products, a producer based in Vancouver, which uses processing centers in Washington state “to partially mitigate the damaging effects of duties on our products destined for the U.S. market,” according to a company report. The company’s lumber shipments to the U.S. represented 44% of its total lumber revenue in the first three quarters of 2021, up from 39% last year.
Another wrinkle to the ongoing dispute has been the inclusion of high-value specialty lumber products in the punitive tariffs. Western Forest complained that it is “disproportionately impacted by these duties” since its “shipments to the U.S. market consists of significant volumes of high-value, appearance grade lumber.”
The IWPA claims that Canadian value-added wood manufacturers are unfairly penalized by the dispute. “Value-added wood producers end up paying the duty twice,” said Menzies. They buy Canadian softwood lumber with the U.S. tariffs priced in “and when the value-added product is exported the duty is applied to the higher price.”
With supply-chain snafus ongoing, and demand for wood products increasing, it’s fair to say that many lumber interests on both sides of the U.S.-Canadian border would appreciate some respite from this ongoing controversy.