The Trump administration is taking retaliatory action against Canada over the softwood lumber issue. Commerce Secretary Wilbur Ross announced yesterday evening a preliminary countervailing duty (CVD) rate of 19.88% will be levied against Canadian softwood lumber exports to the United States. Individual rates will be assessed to the five companies that were investigated. They are: West Fraser, 24.12%; Canfor, 20.26%; Tolko, 19.50%; Resolute, 12.82%; and J.D. Irving, 3.02%. The weighted average of those five companies' rates determine the "all other" CVD rate of 19.88%. Special circumstances were found against J.D. Irving and "all other" Canadian companies, which means those duties will be retroactive 90 days from when the CVD determination is published in the Federal Register.
Mr. Ross said the tariff would be applied retroactively and imposed on Canadian exports to the U.S. of about $5 billion a year. Commerce Secretary Ross said the dispute centers on Canadian provinces that have been allegedly allowing loggers to cut trees down at improperly subsidized costs and sell them at lower prices. The move, although preliminary, has the immediate consequence of discouraging importers from buying lumber from Canada. The Canadian government said it “disagrees strongly” with the decision. Softwood lumber is typically used to build single-family homes, but also by the wooden pallet and container industry. Pallet manufacturers who use softwood lumber are extremely concerned, and several companies stated it will adversely affect them and the industry. The agreement expired in 2015 and was extended for one year to the end of 2016. Since the expiration, the U.S. and Canada have been operating under no agreement. The US Commerce Department is expected to make a final determination to the anti-dumping case by June 23, 2017.
There has been no progress to date on the Softwood Lumber Agreement or expected timeline for completion.