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Trump targets Canadian timber

Donald Trump

The Trump administration is taking retaliatory action against Canada over a decades-old trade dispute, moving to impose a 20% tariff on softwood timber that is typically used to build single-family homes, Commerce Secretary Wilbur Ross said yesterday. Source: The Australian

Mr Ross said the tariff would be applied retrospectively and imposed on Canadian exports to the US of about $US5 billion ($6.6bn) a year.

He said the dispute centred on Canadian provinces that had been allegedly allowing loggers to cut trees down at improperly subsidised costs and sell them at lower prices.

The decision is preliminary and the Commerce Department will need to make a final determination.

After that, the US International Trade Commission will also need to find that the US industry has suffered injury before any tariff is levied. But even a preliminary decision has immediate consequences, by discouraging importers from buying timber from Canada.

“We tried to negotiate a settlement but we were unable,” just as previous administrations were also unable to resolve the dispute with Canada, Mr Ross said, adding that the Trump administration had notified Canada of its decision.

The Canadian government said yesterday it “disagrees strongly” with the Commerce Department’s decision, arguing the reasoning was based on “baseless and unfounded” allegations from the US timber industry.

In a joint statement from Canadian Foreign Minister Chrystia Freeland and Resources Minister Jim Carr, the Liberal government said it would defend the country’s timber interests, including through litigation, and press the Trump administration to “rescind this unfair and unwarranted trade action”.

It added the move hurt both the US and Canadian economies, most notably by increasing the cost of building a new house.

President Donald Trump’s heightened rhetoric over Canadian treatment of US timber and dairy producers in recent days marked a sharp pivot for the President on the US’s northern neighbour and second-largest two-way trading partner, after China, with nearly $US545bn in goods and services crossing the border last year.

In the lead-up to the decision on timber duties, US-Canada trade watchers said the Trump administration’s move on timber could serve as an opening gambit in laying out what he wants Canada to put on the table as part of the North American Free Trade Agreement renegotiations, which have yet to begin.

Canadian Prime Minister Justin Trudeau said last week that when it came to trade irritants, from timber to dairy, he would “present the facts” to Washington and aim to work constructively on making improvements to NAFTA.