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United States of America / Canada – In August 2023, Canada filed for judicial review of the US Commerce Department’s decision to extend import duties on Canadian softwood lumber tariffs. This resulted in a 7.99% fee set by the US government on imports from Canadian sawmills. Ottawa remains willing to negotiate with the US after classifying the extension as “unfair, unjust, and illegal.”
Lumber Tariffs Under Review
Each year, nearly $8 billion worth of Canadian lumber is imported by American home builders. Resentful of Canada’s competition, American home builders claim Ottawa unfairly subsidizes the lumber sector as most of Canada’s timber is harvested from federal and provincial lands with low government-set stumpage fees. Meanwhile, most timber in the U.S. is harvested from private land at fair market value.
Trade Minister Mary Ng says that the American duties are illegal while the U.S. Trade Representative’s office called for Canada to “address the underlying issues related to subsidization and fair competition.” The Canadian Trade Ministry has regularly filed challenges under the U.S. – Mexico – Canada Agreement on trade.
Dispute expires in 2015
The decades-long dispute regarding Canada’s timber sector was unable to be resolved following the expiration of a quota agreement in 2015.
After the quota’s expiration, the United States imposed duties which Canada continues to challenge. Between 2017 and 2022, Canada’s softwood producers paid approximately $8 billion in lumber duties to the U.S.
Canadian Government awaiting agreement
Leaders in Canada’s lumber industry urged Trudeau to finalize a deal with President Biden during his trip to Ottawa in March. Before Biden and Trudeau’s meeting, the Canadian government indicated no agreement was anticipated. Considering that President Biden must obtain votes from politicians on Capitol Hill who are threatened by the Canadian lumber competition, any future resolution seems distant.
The United States Trade Representative’s office remains determined in securing an equal level playing field. A USTR spokesperson provided an emailed statement saying, “We are prepared to discuss another softwood lumber agreement when Canada is ready to address the underlying issues related to subsidization and fair competition so that Canadian lumber imports do not injure the U.S. industry.”
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