Last month U.S. Senator Amy Klobuchar issued the following statement on reports that the Commerce Department made preliminary determinations and could impose tariffs on softwood lumber coming to the U.S. from Canada.
“New tariffs could bring welcome relief to workers, producers, and rural communities in Minnesota and across the country that have been hurt by unfairly traded softwood lumber. We should keep working to negotiate a long-term softwood lumber agreement with Canada that protects American timber jobs,” said Klobuchar.
President Donald Trump’s administration has accused Canada of unfairly subsidizing the softwood industry, contending the Canadian government has charged below market rates for wood harvested on public lands.
Last year imported softwood lumber from Canada was estimated at $5.66 billion, according to the U.S. Commerce Department.
On Monday, April 24, U.S. Commerce Secretary Wilbur Ross announced his agency would enact anti-subsidy tariffs averaging 20 percent on imported Canadian softwoods.
Wayne Brandt, executive director of the Duluthbased Minnesota Timber Producers Association, said the softwood lumber agreement between the U.S.- Canada worked well until it ended in 2015.
“We would prefer that the two countries work together and set a rational system for pricing softwoods,” Brandt said.
The softwood lV agreement ended October 2015 and the U.S. Department of Commerce began a new trade investigation on December 15, 2016.
Scott Dane, executive director of the Gilbertbased Associated Contract Loggers and Truckers of Minnesota said the state has lost seven major lumber mills since the housing market crashed. During that downturn the state lost about 25 to 30 percent of its total logging workforce. Today no more than 1,500 people work as loggers, he said, but those lumberjacks supply enough wood for paper and lumber mills to keep around 40,000 employed.
Locally Hedstrom Lumber is only somewhat affected by the proposed tariff, said Jeff Johanns, V.P. of sales and operations. Hedstrom’s imports some logs from Canada, but they aren’t included in the crackdown, said Johanns.
“Most of the tariff is for dimension lumber 2x4s, 2×6, 2×8’s, and we aren’t really in that market anymore. But because the markets are intertwined, long term, this will provide some benefit for us.”
Johanns said he has been through four of these types of agreements—or disagreements—between the two countries. “This is nothing new. One thing I would like to see is the currency exchange rate tied to a new plan. That should help keep things fair between the two countries.”
Last October, Klobuchar and a bipartisan group of senators called for any new softwood lumber agreement with Canada to protect U.S. timber jobs and communities. Last July, Klobuchar and a bipartisan group of senators urged the U.S. trade representative to negotiate an agreement that fully addresses the harmful effects of subsidized Canadian lumber in the U.S. market and to fully enforce U.S. trade laws against unfairly traded imports, including softwood lumber.
As for the Canadian government, it says it will fight the increased tax on its softwoods.
On April 24, our neighbors to the east in Ontario named Jim Peterson as its chief negotiator to represent Ontario’s interest in the softwood lumber dispute with the U.S.
Forestry industry jobs in Ontario supply approximately 172,000 jobs and create more than $15.5 billion in annual revenue.
In a news release Peterson said, “I’m pleased to serve the people of Ontario in this capacity as chief negotiator. Having dealt with the Softwood lV negotiations, I’m well aware of the complexities and competing interests and I feel confident I can fight for a good deal for Ontario.”
“There won’t be a final agreement for at least 18 months, maybe even 24 months,” said Johanns. “This (new tariff) is just a first shot across the bow.”
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