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Canadian Lumber Hit With New US Tariffs

by Mike Godfrey, Tax-News.com, Washington

03 November 2017


The Canadian Government has described the US Department of Commerce's decision to impose countervailing and anti-dumping duties against imports of softwood lumber as "unfair, unwarranted, and deeply troubling."

In a statement, Foreign Affairs Minister Chrystia Freeland and Natural Resources Minister Jim Carr said that the duties are "punitive," and that the Canadian Government "will continue to vigorously defend our industry against protectionist trade measures."

The ministers said: "We urge the US Administration to rescind these duties, which harm workers and communities in Canada. These duties are a tax on American middle-class families too, whose homes, renovations, and repairs will only be more expensive. Further, it is clear the tariffs are worsening the lumber supply problem in the United States and forcing US home builders to look overseas to meet their demand for lumber."

The US Department of Commerce has issued a final determination in which it states that exporters from Canada have sold softwood lumber in the US at between 3.2 percent and 8.89 percent less than fair value. In addition, it concluded that Canada is providing unfair subsidies to its producers at rates from 3.34 percent to 18.19 percent.

Commerce issued preliminary determinations in its countervailing duty and anti-dumping duty investigations in April and June, respectively. In August, Commerce said that it was delaying the final determinations in the hope that a negotiated settlement could be reached. However, it has now said that despite efforts by the US and Canada, and their respective softwood lumber industries, the parties were unable to reach a mutually acceptable settlement.

US Commerce Secretary Wilbur Ross commented: "While I am disappointed that a negotiated agreement could not be made between domestic and Canadian softwood producers, the United States is committed to free, fair, and reciprocal trade with Canada. 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."

US Customs and Border Protection will now be required to collect cash deposits from importers of softwood lumber from Canada, based on the final rates.

Freeland and Carr said that the Canadian Government is reviewing its options, including the possibility of legal action through NAFTA and the WTO. They added that the Government "will not delay in taking action." Carr will convene the Federal-Provincial Task Force on Softwood Lumber in the coming days to discuss the developments.

Dumping occurs when goods are sold into a foreign market at below the prevailing market rate in the exporter's domestic market. Countries can respond by levying taxes on imports to prevent unfair competition for their domestic producers, known as anti-dumping duties. To counteract unfair subsidies, countries may also introduce countervailing duties.

TAGS: tax | business | tariffs | anti-dumping | World Trade Organisation (WTO) | trade disputes | tax rates | Canada | United States | import duty | trade

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