The US Commerce Department’s recommendation to more than double the “all others” preliminary countervailing and anti-dumping rate to 18.32% from 8.99% on Friday drew criticism from the Canadian government and industry and applause from the lumber industry south of the border.
The increase is unlikely to result in higher lumber prices because they’ve more than doubled in the past year to all-time record highs, said Kevin Mason, director of ERA Forest Products Research. “(Tariffs) drive the cost up for producers, but it’s not going to affect prices.” – he said.
Because it’s a preliminary tariff rate, current cash deposit rates will continue to apply until the finalized rates are published, likely in November.
Paul Quinn, an RBC analyst, believes that higher rates will incentivize producers to push harder to resolve the softwood lumber dispute, which could unlock significant cash. Noting an estimate that Canadian producers collected tariffs on deposit adds up to more than $4 billion.
Friday’s rates applied to individual companies vary in impact, Paul Quinn said, with West Fraser Timber Co. Ltd. up slightly to 11.4 from 9%, Canfor Corp. up to 21 from 4.6%, Resolute Forest Products Inc. jumping to 30.2 from 20.3%, and J.D. Irving up to 15.8 from 4.2%.
The increased tariffs will hurt American consumers who are faced with a market where supply can’t keep up with demand, said Susan Yurkovich, president of the BC Lumber Trade Council. She called on the U.S. industry to end its decades-long campaign alleging Canadian lumber is unfairly subsidized and instead work with Canada to meet demand for “low-carbon wood products” the world wants.
In a separate news release, Jason Brochu, U.S. Lumber Coalition co-chair, applauded the Commerce Department’s commitment to enforce trade laws against “subsidized and unfairly traded” Canadian lumber imports.
The coalition says the U.S. industry remains open to a new U.S.-Canada softwood lumber trade agreement “if and when” Canada demonstrates it is serious about negotiations.