Canada Lumber Aid Inflames US Subsidy Claims, Industry Says
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The U.S. lumber industry says new financial support pledged by Canada to domestic forestry companies risks deepening the neighbors’ long-running trade dispute and may result in yet more import taxes.
Last week, Prime Minister Mark Carney promised as much as C$1.2 billion ($870 million) in loan guarantees, grants and contributions for Canadian sawmills to pursue product development and market diversification — in response to what he said were unjustified U.S. import taxes.
Three days later, the U.S. Department of Commerce separately confirmed it would more than double combined anti-dumping and countervailing duties on Canadian softwood lumber to 35.19%, aimed at counteracting what it alleges are sales below market prices and Canadian subsidies to sawmills — partly in the form of low fees firms pay to provincial governments to harvest logs, known as “stumpage rates.” Canada rejects the claims.
“We will absolutely be asking Commerce to look at whether companies received a distortive benefit from this package,” said Whitney Rolig, who acts as lead attorney for the U.S. Lumber Coalition.
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When asked if Carney’s support package would increase countervailing duties imposed by the U.S. when it retroactively reviews the 2025 and 2026 market in the future, the trade group’s executive director, Zoltan Van Heyningen, said: “It’s not going to decrease it.”
“It’s reflective of the Canadian system, which is one where government intervenes, government helps and government has a big role,” Van Heyningen added. “And I know that’s sort of second nature in Canada, and it’s fine for Canada to have that system.” The issue arises when a majority of Canadian lumber is shipped over the border and becomes subject to U.S. trade law, he said.
President Donald Trump has said the U.S. doesn’t need Canada’s lumber and has requested the Commerce Department probe the national security risk of U.S. wood imports, which could lead to tariffs on top of the escalating duties.
“Today, the Canadian producer wants to be at 35%-plus market share in the United States, in order for the Canadian industry to run at a healthy capacity utilization rate, based on that excess capacity that they have,” Van Heyningen said. “We today want Canada to be at least 10, 15 points lower, in terms of market share” based on current capacity and future forecast capacity, he said.
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Canada’s market share has already fallen from 35% to about 21% in recent years, he said.
“There are no subsidies in the federal government’s program,” said the Quebec Forest Industry Council in an emailed statement. The regional lobby group said that “even the Department of Commerce has long since ceased to consider loan guarantees as subsidies,” and the aid package also aims to boost domestic demand, thus reducing exports to the U.S.
The prime minister’s office and Natural Resources Canada didn’t immediately respond to requests for comment.
Resolving the long-running trade dispute with the U.S. remains a top priority, but the new measures will make sure mills keep operating and employees keep working, said Eric Johnson, vice president of federal government relations with the Forest Products Association of Canada.
“We’re never going to diversify our way out of the U.S. The history, the proximity, the product qualities and their sheer demand — the economics just don’t allow for that,” Johnson said. “But finding ways to lessen our reliance on them, that’s what this will do.”
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