(Bloomberg) -- The US threatened import taxes on Canadian lumber products totaling 52%, raising fears about the industry’s future and increases to US homebuilding costs.
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The Department of Commerce on Monday proposed almost tripling anti-dumping duties on Canadian softwood lumber to 20.07%, according to a document posted to the US International Trade Administration database. There’s already a 6.74% countervailing duty on that wood. The levies are meant to counteract the so-called dumping of low-priced Canadian lumber.
Also on Monday, President Donald Trump confirmed the US would impose 25% tariffs on all Canadian and Mexican goods except Canadian energy products.
Stacking the Commerce Department’s duties and Trump’s tariffs would total 51.81%. Confirmation of the new anti-dumping duty is expected in August, according to Kurt Niquidet, president of the British Columbia Lumber Trade Council. There are rarely differences between preliminary and final determinations, he said.
Lumber futures rose on Monday to their highest levels in more than two and a half years, while shares in Canadian lumber companies such as Interfor Corp., West Fraser Timber Co. and Canfor Corp. slumped on the levy news.
Softwood lumber has been a decades-old irritant in the trade relationship between the two countries. The US argues Canada subsidizes its loggers by charging cheap fees for harvesting, and has repeatedly slapped duties on Canadian softwood over the years.
On Saturday, Trump ordered an investigation into the national security harm posed by wood imports, which could tee up additional import controls. He signed an executive action to expand domestic timber production.
Canada supplies as much as 30% of the softwood lumber the US needs and most of the lumber that it imports.
“If all of these taxes move forward, it’s hard to see how parts of the Canadian paper and forestry products sector aren’t ravaged,” analysts with Bank of Nova Scotia wrote in a note to clients Monday, before the anti-dumping duty increase was announced. If all of these threatened taxes are imposed, “going-concern risk will inevitably rise for marginal mills in Canada,” they added.
The countervailing duty is also pending a review later this year, but Niquidet said he doesn’t expect it to rise. British Columbia is a prolific lumber harvesting province.