Steps have been taken by the Trump Administration to impose a new 20% tariff on Canadian softwood lumber coming into the U.S. These steps are the culmination of complaints that have been levied at Canadian lumber producers and exporters for years. The Department of Commerce determined last week (at least preliminarily) that the Canadian government subsidizes their timber industry through the way that timber is harvested there. A second investigation is underway to determine if allegations of past Canadian “dumping” of subsidized lumber on U.S. markets has hurt the U.S. timber industry in the past.
In Canada, timber companies can harvest on Crown lands by paying a fee to the government, while harvesting in the U.S. has been largely relegated to private lands since the early 1990’s. This “subsidy” has allegedly allowed the Canadians to sell lumber in the United States at a lower cost than domestically produced lumber, causing many here in the U.S. to cry foul.
A protective tariff on Canadian softwood lumber is meant to shift demand to domestic sources. This would theoretically benefit family forestland producers, loggers and foresters, mills, etc. here in the Northwest. However, the National Association of Homebuilders is claiming that the tariff will increase the cost of housing construction, hurting their industry and making it harder for home buyers to get financing.
While we have seen steady to modest increases for log prices even before the announcement of the new tariff, it is still too early to see if and just how much the anticipated higher log prices will benefit our clients here in Oregon and Washington.