The meet-and-greet Tuesday between Canadian Prime Minister Mark Carney and President Donald Trump undoubtedly included a discussion of tariffs between the two countries.
Earlier in the day, Trump had ruminated on Truth Social about why, from his perspective, America was subsidizing Canada. “We don’t need their Cars, we don’t need their Energy, we don’t need their Lumber, we don’t need ANYTHING they have,” Trump wrote.
When it comes to wood imports, that is certainly the position of the U.S. Lumber Coalition, which has maintained that the U.S. timber industry can supply virtually all of the U.S. housing industry’s lumber needs, but it is being crippled by cheap imports from Canada.
The coalition, an alliance of softwood lumber producers, argues that Canada has long been dumping softwood lumber on the U.S. market and selling it below the cost of production, or below their home sales market price.
In response, the U.S. Department of Commerce has investigated the complaints, and the U.S. International Trade Commission has heard the cases. Only after much deliberation are duties placed on the lumber imports. For instance, after more than a year of investigations into industry complaints about Canadian subsidies given to their lumber industry, the U.S. increased the existing duty to 14.56%.
Those duties could increase to 34.5% later this year, after more dumping charges were leveled at Canadian producers. The final determination is set for August or September.
Earlier this year, tariffs were set to be added to the duties to be added on top of the 34.5% duties, greatly increasing the cost of Canadian lumber. But lobbying by some groups, including the National Association of Home Builders (NAHB), helped Canadian softwood avoid being placed on the list of imports facing tariffs from the Trump administration.
NAHB has argued that Canadian softwood imports account for about 30% of the wood used in building homes in the U.S. Without the Canadian imports, the housing construction industry would be hit by shortages and higher construction costs at a time when housing construction costs are near record highs.
Zoltan van Heyningen, executive director of the U.S. Lumber Coalition, maintained in an interview with Scotsman Guide that the Canadian lumber industry has increased its excess lumber capacity by threefold since 2016 and now has 8.7 billion board feet of excess production capacity. Much of that wood is coming into the U.S. market and undercutting American lumber producers, he claimed.
The differences between duties and tariffs
Van Heyningen said the legal cases for duties are different than tariffs, which are political in nature, with the Trump administration making arbitrary decisions. Duty complaints go through a clear and thorough process that allows all sides to argue for their positions before a decision is rendered. There are no surprises.
But Canada continues to fight the U.S. duties, just as they have lobbied against the tariffs. Van Heyningen said the argument some have made that increasing the duty on Canadian lumber would drive up housing prices is absurd. He said the current duty on Canadian wood amounts to only about 0.04% of the total cost of a new home. Even if the duty was doubled, it would make virtually no difference to home builders.
He said the U.S. lumber companies could produce an extra 6.1 billion board feet and make up nearly 100% of the lumber needed in the U.S. market over time. But the cheap Canadian lumber is making it impossible for U.S. producers to sell as much lumber as they otherwise would.
“The point we’re basically making is we could supply a lot more than we do. And you know, quite frankly, if the president wants us to get to 100% of demand, that is well within striking distance,” van Heningen said. “The biggest impediment of that is Canada’s excess lumber capacity. Frankly, they are just desperate to sell into the U.S. market. So, when some people say we need their lumber, what the Canadians are actually saying is we need your market.”
