The U.S. government issued duties on Canadian softwood imports averaging 29% in March, charging that our neighbor to the north subsidizes its industry to undercut American lumber's price. The tariffs went into effect in May after their unanimous approval by the U.S. International Trade Commission.
The issue centers on the stumpage fees the Canadian government charges companies to harvest from public land. The United States claims that Canada purposefully sets those fees too low in order to give their companies an advantage over American producers who rely mostly on privately owned forests.
The dispute has been brewing for decades. The first Commerce Department investigation of the issue in 1982 found the Canadian system fair, but subsequent investigations disagreed. A 1996 agreement between the two countries that limited Canadian imports kept the problem at bay, but following the expiration of that agreement in 2001, the United States imposed temporary duties averaging 32% pending another Commerce Department investigation. That investigation concluded that slightly scaled back duties were necessary to even the timber trade playing field.
Canada considers the imposition of duties an act of protectionism and has taken its charge to the World Trade Organization and a panel of the North American Free Trade Agreement. The NAHB has sided with the Canadians, stating in a press release that the duties "are without merit and would harm housing affordability by acting as a tax on American home buyers, renters, and consumers." NAHB economist Michael Carliner calculates the duties will "add up to $1,500 to the cost of a new home."
A group formed by U.S. forest product companies known as the Coalition for Fair Lumber Imports says the tariffs don't go far enough. "While we appreciate our government's action against unfair trade, we believe the Commerce Department has still underestimated the scale of Canada's subsidies," says Rusty Wood, the group's chair. The coalition had asked for the duties to be as high as 78%.