As tariffs increase, Americans are trading American softwood lumber for Canadian wood

Story highlights Americans burned out of softwood lumber are now leaving the country in search of cheaper supplies.

Canada may retaliate against the U.S. by increasing its tariff on imported U.S. lumber.

Unfortunately for American softwood lumber exporters, Canadian homebuilding is booming, so they’re turning to exports.

Canadian Prime Minister Justin Trudeau said Sunday that he’s considering a retaliatory tariff against the U.S. after the Commerce Department on Friday raised tariffs to a 50% rate on softwood lumber from Canada.

The new rule would increase duties from the current duty rate of 15% to effectively triple them.

Critics were quick to point out that NAFTA already requires Canadian timber exports to the U.S. to be bought from Canadian producers.

“These duties have been in place for 18 years, and they’ll be for the next 18 years to come, I hope,” Canadian Minister of Natural Resources Jim Carr said Sunday.

The new, higher duties come after the U.S. Commerce Department increased its duties on Canadian softwood lumber from 15% to nearly three times that amount.

An estimated 21,000 Canadian lumber jobs will likely be in jeopardy because of this new duty rate, which goes into effect April 1.

But Americans should be used to such type of news: More than 60,000 U.S. jobs are involved in the shipping and distribution of lumber, according to the National Association of Home Builders. In 2017, Americans burned through 172 million cubic feet of lumber from Canada, most of which was destined for U.S. homes.

This Canadian homebuilding boom is happening despite higher and higher duties on lumber exports to the U.S. since early 2000, according to Statistics Canada.

According to the Bureau of International Trade, the U.S. exported just 8.3 million cubic feet of lumber to Canada in 2017, but the numbers for 2018 are expected to skyrocket.

In a tweet posted on Friday, President Donald Trump said the “USTR has just announced a 50% Tariff on large categories of steel and a 10% Tariff on Aluminum!”

The tweet appeared to reference the effect that World Trade Organization rules have on how many duties the U.S. imposes on other countries.

However, this has not necessarily kept U.S. businesses from introducing tough anti-dumping and countervailing duties against foreign lumber sources.

“U.S. steelmakers told me and many other Americans who have contacted me that Chinese steel is subsidized — U.S. steel mills sell for less than they earn in China and that is because it’s subsidized,” said Carr.

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