The US is still planning to impose stiff duties on several Canadian firms who the Americans say were selling lumber into the US market below fair value, claiming the Canadian government was providing them with unfair subsidies.
The antidumping duty and countervailing duty laws provide USA businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of dumping unfairly priced and unfairly subsidized imports into the United States.
The U.S. Department of Commerce on Thursday set final duties on Canadian softwood lumber after finding that imports had been being unfairly subsidized and dumped in the United States, escalating a trade dispute with Canada in the midst of NAFTA trade talks.
The weighted average tariffs levied by the Trump administration consist of 14.25 per cent for countervailing duties and 6.58 per cent for anti-dumping levies.
Commerce Secretary Wilbur Ross said in a press release. The moratorium on trade litigation ran out in October 2016, and USA lumber interests started calling for trade sanctions on Canadian wood.
But the B.C. government is also aggressively trying to push B.c. lumber into Asian markets. To counteract unfair subsidies, countries may also introduce countervailing duties. The move follows the government's decision earlier this year to impose combined duties of as much as 31 percent on shipments from Canadian companies including West Fraser Timber Co. and Canfor Corp.
Nova Scotia has been collaborating with industry, Ottawa and US officials since the expiry of the previous Softwood Lumber Agreement in October 2015, to explain why the exclusion should be maintained. "These duties are a tax on American middle class families, too, whose homes, renovations and repairs will only be more expensive".
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US and Canadian officials have been working for months with industry representatives to come to an agreement to avoid the tariffs announced Thursday, which if permanently imposed will add a duty of around 20% or more, depending on the Canadian mill. The tariffs will take full effect at the border if a USA trade body confirms that the Canadian practices injured the US industry, a decision expected later this month.
"This decision is based on a full and unbiased review of the facts in an open and transparent process that defends American workers and businesses from unfair trade practices", Ross said.
While the duties are lower for most producers than first indicated by United States officials, Prime Minister Justin Trudeau says they are still unacceptable.
The ministers said Ottawa will turn to litigation if required to defend the industry and expects to prevail as it has in the past.
The trade issue will probably not be resolved in the near term as the renegotiation of the North American Free Trade Agreement has taken center stage, Mark Wilde, an analyst with BMO in NY, said Wednesday in an email.
The duties have driven up the price of lumber to cover the extra costs, adding to the cost of building a home in the United States. Canadian unions and lumber companies fear the issue will eventually cause layoffs once prices and demand fall.
Last year, the United States imported about $5 billion worth of lumber of Canada.