The United States rekindled an old trade conflict with Canada when it has announced that it was slapping new tariffs on Canadian softwood lumber imports. The US Commerce Department said it had reached a “preliminary determination” that Canada is improperly subsidizing softwood lumber exports to the United States. Softwood lumber is used mainly for home building.
The Commerce Department said that, after talks failed to reach an agreement, it would impose “countervailing duties” of between three and 24 per cent. The department “will instruct US Customs and Border Protection to collect cash deposits based on these preliminary rates.”
Furthermore, “certain companies will be subject to the retroactive collection of cash deposits” for up to 90 days. Officials in Canada, the second most important US trade partner, rejected claims of subsidies. The US Commerce Department said that in 2016 softwood lumber imports from Canada were valued at $5.66 billion.
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“Canada disagrees strongly with the US Department of Commerce’s decision to impose an unfair and punitive duty. The accusations are baseless and unfounded,” a statement signed by Foreign Affairs Minister Chrystia Freeland and Natural Resources Minister Jim Carr read.
“This decision will negatively affect workers on both sides of the border, and will ultimately increase costs for American families who want to build or renovate homes.” Canada “will vigorously defend the interests of the Canadian softwood lumber industry, including through litigation,” it said, adding that it has prevailed in international tribunals on the issue since 1983.
The softwood lumber dispute between Washington and Ottawa has seen many twists and turns for nearly 35 years, with US producers accusing their Canadian counterparts of exporting lumber at subsidized prices. Canada, the United States and Mexico are part of the North American Free Trade Agreement. However, Canadian softwood exports are regulated under a bilateral agreement reached in 2006, which expired in 2015.
President Donald Trump, who took office in January, spent much of his campaign blasting the NAFTA agreement and stating that he would renegotiate it to get a better deal. Trump’s campaign attacks focused mainly on Mexico, but recently he has focused on Canada, especially over dairy imports.