Lumber Tariffs Could Lead to New Softwood Agreement

The softwood lumber trade saga between the United States and Canada kicked into another gear last week, when President Donald Trump placed tariffs of up to 24 percent on imported softwood lumber, a move the Canadian government decried as unfair and punitive.

Softwood lumber has been the subject of an enduring trade dispute between the two countries, and the most recent Softwood Lumber Agreement (SLA) lapsed last November after 10 years.

Montana’s Congressional delegation praised the president’s action on softwood lumber, which has been a sore spot between the two countries as they operate without a SLA for the first time since 2006.

“President Trump has taken decisive action to put America first and protect against unfairly subsidized lumber that harms Montana mills,” U.S. Sen. Steve Daines, a Republican, said in a statement. “For too long Canadian softwood lumber has had a significant negative impact on Montana jobs. Canada needs to play by the same set of rules that Montanans do.”

Montanan Democratic Sen. Jon Tester also praised the president’s move to add the tariffs, saying it could bring the two countries together to form a new agreement on lumber.

“I look forward to working with the president and the Canadian government to forge a new softwood lumber agreement that works for Montana,” Tester said. “A new softwood lumber agreement will provide good-paying jobs for Montanans.”

The bones of the dispute are about two different forms of government having two different forms of lumber harvest. Canada’s provincial government owns the majority of timberlands that provide trees to Canadian producers, charging an administered fee. In the U.S., the timberlands are typically privately owned, and the market determines the price of those logs through public sales.

Under the 2006 bilateral deal, Canadian producers agreed to put a quota on softwood lumber imports to the U.S. or to pay taxes on the goods shipped here. The deal expired in October 2015, and no trade complaints could be filed within a one-year window. One month after the yearlong window, the U.S. Lumber Coalition filed a petition with the federal Commerce Department and International Trade Commission to seek duties for Canadian lumber that the coalition said is dumped into the U.S. market under market value.

Chuck Roady, general manager at F.H. Stoltze Land and Lumber in Columbia Falls and the director of the Montana Wood Products Association, said the hope is that tariffs will spur the Canadians to take action on a new SLA.

“The whole idea is to level the playing field because we have two different systems in the countries,” Roady said. “I think (the tariffs) might motivate them to come to the table a little more. There hasn’t been any leverage for the Canadians to come to the table.”

Roady said the president’s administration sent a message of strength with the tariffs, signaling that the U.S. wouldn’t back down on the issue. But Roady hopes an amicable agreement can be reached with our neighbors to the north.

“Shoot, nobody likes the animosity between the two countries,” Roady said. “We don’t have anything against Canada, but the two systems are different, so we need to work something out. Not to say that either system is wrong.”

Canadian Minister of Natural Resources Jim Carr and Minister of Foreign Affairs Chrystia Freeland, however, said the tariffs would hurt American families who want to build or renovate homes, since Canadian lumber is often used in those projects, as are Canadian companies and workers.

“The Government of Canada disagrees strongly with the U.S. Department of Commerce’s decision to impose an unfair and punitive duty,” the statement from Carr and Freeland said. “The accusations are baseless and unfounded.”

“Canada will continue to press their American counterparts to rescind this unfair and unwarranted trade action,” the statement continued. “We are committed to working with the U.S. Administration to achieve a durable solution.”

Roady disputed the assertion that the tariffs would add significant costs to American homebuilders, saying softwood lumber is about 1 percent of the cost of building a house.

“It isn’t going to change the price of building a home,” Roady said. “What it really will do is it will substitute U.S. production of lumber instead of Canadian production of lumber, and that isn’t necessarily going to equate to a raise in price.”