Canadian lumber | US tax doubles

The decision was expected but it still hurts. Countervailing duties collected by the United States on Canadian lumber will double in the coming days, from an average of 8.99% to 17.9%.

The US Department of Commerce hits all lumber exporters in Canada, but particularly Resolute Forest Products, headquartered in Montreal, which faces a combined tax of 29.66%.

This conflict with the Americans has lasted too long, reacted Louis Bouchard, spokesperson for Resolute. “Our position has been the same from the start, access to the US market should be free and unimpeded,” he said.

The duties collected on lumber that Resolute ships to the United States will decrease from the current 20.25% to 29.66%. By the end of the year, the company will have paid US $ 400 million in countervailing duties.

All this cash tied up with the US government compromises our competitiveness. It affects our ability to invest and modernize our facilities.

Louis Bouchard, spokesperson for Resolute forest products

The United States has collected $ 6 billion in countervailing and anti-dumping duties since the start of this new episode in the softwood lumber war in 2018. Of this amount, $ 1.2 billion comes from Quebec companies.

The new rates imposed by the Commerce Department follow its annual administrative review of market conditions. They have averaged 17.9%, with a low of 11.12% for West Fraser and a high of 29.66% for Resolute.

The way Americans treat Resolute is completely unfair, says Michel Vincent, economist with the Quebec Forest Industry Council. He recalls that the World Trade Organization ruled in favor of Canada, which contested the calculation applied to Resolute and the entire dispute with the United States.

“It is scandalous that our main trading partner is acting in this way,” said Michel Vincent.

Unsurprisingly, the American Softwood Lumber Group, which is behind the accusations of dumping Canadian lumber, applauded the US government’s decision to double the duties on softwood lumber. Canadian.

“The ruling once again confirms that Canadian imports are unfairly subsidized,” said Jason Brochu, president of the US Lumber Coalition and co-owner of the Pleasant River Lumber Company.

According to him, since the imposition of duties on imports from Canada, lumber production has increased in the United States, and the American industry can better meet growing American demand.

US sawmills have produced an additional 17.5 billion board feet over the past five years, the coalition said in a statement.

Impact on prices and the market

The increase in taxes on Canadian lumber comes when demand is still strong and it risks pushing up the price of lumber in North America, estimates the Quebec Forest Industry Council.

In addition, recent weather disasters in British Columbia, the largest producer in Canada, could also push up the price of lumber.

Lumber prices are down from the stratospheric level reached this summer, but remain at a historically high level. If demand continues, Canadian producers should be able to pass the tax hike on to their US customers.

“In an environment where demand is strong enough, we can recover the rates with the prices”, indicated the president and chief executive officer of Resolute, Rémi Lalonde, during the publication of the financial results of the company at the beginning of the month. month.

The possibility of an upcoming interest rate hike on both sides of the border, however, could be a game-changer and calm housing construction.

Already, the National Association of Home Builders is concerned about the rising costs of building homes in the United States. According to the American group, which opposes the imposition of taxes on Canadian lumber because they increase construction costs, building a new house costs 17.5% more than a year ago because of the increase in the price of materials.

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