Canada to challenge US lumber duties using regional trade pact

Canada’s government said it will challenge US duties on softwood lumber, saying the tariffs have caused “unjustified harm” to the industry and workers.

“Canada is disappointed that the United States continues to impose unwarranted and unfair duties,” International Trade Minister Mary Ng said in a statement Thursday. “While the duty rates will decrease from the current levels for the majority of exporters, the only truly fair outcome would be for the United States to cease applying baseless duties.” 

Ottawa will request dispute settlement through the US-Mexico-Canada trade agreement after the Commerce Department ruled it will keep in place levies on some imports, according to the statement.

The lumber-tariff challenge would be the latest to use a dispute-resolution mechanism in the USMCA agreement between the three nations, previously known as Nafta. Canada and the US have lodged a complaint over Mexico’s nationalist energy policy, while all three are engaged in a spat over car manufacturing. 

The Trump administration imposed tariffs on Canadian softwood lumber in 2017, saying the industry is unfairly subsidized. The US raised rates on imports in 2021 even as an unprecedented rally lifted prices to record highs during a pandemic-fueled homebuilding and renovation boom. 

Ng added that the tariffs “also amount to a tax on US consumers, exacerbating housing unaffordability at a time of increased supply challenges and inflationary pressures. US builders get more than a quarter of their lumber from Canada, the world’s largest softwood-lumber exporter. 

The US Commerce Department on Thursday ruled that the new, combined “all others rate” that will apply to some Canadian softwood-lumber exports will drop to 8.59% from 17.91%.