Canada Plans Grants to Offset Soaring US Lumber Duties
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Prime Minister Mark Carney promised as much as C$700 million ($508 million) in loan guarantees to shore up Canada’s lumber industry, which has been hit hard by U.S. duties that are about to significantly increase.
Carney said Aug. 5 the guarantees will ensure forestry companies of all sizes can maintain and restructure their operations. He also pledged C$500 million in grants and contributions for product development and market diversification.
“Canada does not dump lumber into the United States, and we will continue to make the case that these current and proposed duties are unjustified,” Carney said in West Kelowna, British Columbia.
“We are a vital supplier to our southern neighbor, representing around a quarter of the U.S. market and helping to keep down the costs of American homes.”
The dispute between the U.S. and Canada over softwood lumber stretches backdecades, with the U.S. periodically imposing duties to counteract what it claims are unfair Canadian government subsidies.
The Commerce Department is expected on Aug. 8 to conclude hiking duties on Canadian softwood to about 35% from a previous total of 14.4%. That’s a combination of anti-dumping and countervailing duties.
President Donald Trump has escalated the fight even further,orderingan increase to U.S. lumber production and an investigation of thenational security riskof lumber imports. The probe is under Section 232 of the Trade Expansion Act, which Trump has already used to place new tariffs on steel, aluminum andcopper.
Canada shipped C$40.3 billion of forest products and building and packaging materials to the US last year, its fifth-largest category of exports to its largest trading partner.
Carney said his government would launch its promised homebuilding agency, called Build Canada ϳԹs, in the fall, which will prioritize Canadian lumber, steel and aluminum in construction. The government will also draft new initiatives to diversify international markets for Canadian lumber, along with retraining programs for workers, he said.
Canada has long denied the U.S. claim that it sets artificially low “stumpage rates,” fees sawmills pay to provinces to harvest timber from government-owned forests. The World Trade Organization in 2020largely backedCanada’s argument that U.S. levies were unfair.
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But the northern nation’s stance may be softening. Last month, British Columbia Premier David Eby told Bloomberg News that some Canadian leaders areopento a quota on softwood lumber exports to the U.S. in order to resolve the dispute.
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The Canadian industry is already struggling due to U.S. duties, while production has grown in recent years in theU.S. South. The Trump administration’s policies may accelerate those trends, but they also risk driving uphousing prices, as the U.S. will likely struggle to replace the supply of Canadian lumber in the short term.
Trump last week hiked tariffs on imports from Canada that don’t comply with the North American free trade pact to 35%, from 25%.
Carney said the average U.S. rate on Canadian goods remains one of the lowest, and over 85% of trade between the countries is still tariff-free, because of existing exemptions to tariffs.
But major Canadian industries including autos, steel, aluminum and copper are being severely impacted by the trade war, he said. “So, while we will continue to work with the United States on the many mutually beneficial opportunities in trade and investment, it is clear we cannot count on what has been our most valued trading relationship for our prosperity.”
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