A recent decision by the U.S. Commerce Department could signal de-escalation of what has been one of the most fraught American trade disputes with Canada. Following the announcement of preliminary anti-dumping duties in June, the finalized revisions of total countervailing and anti-dumping duties—the total amount of tariffs on Canadian softwood lumber imports—reduce rates for most Canadian exporters.
This is the latest, most promising development in a long-running trade dispute. While the two countries had been trading in softwood lumber since the 1800s and first imposed tariffs on one another in the 1930s, the contemporary dispute started in 1982, when U.S. softwood lumber companies filed a complaint against competing Canadian exporters for unfair subsidization.
Subsequent claims have also contended Canadian provincial governments artificially set below-market prices for the use of public timberlands. These public lands comprise 94 percent of total Canadian lumber-yielding areas, while only 42 percent of U.S. timberlands are under government control.
Canadian provinces have since reformed their leasing and pricing systems and negotiated an agreement on market-share caps as part of prior attempts to avoid stricter tariffs. After five more cycles of duties claims and agreements, many of the same concerns over unfair pricing still remain. American lumber companies also blame a favorable currency exchange for giving Canadian imports the advantage in American lumber markets.
Despite these protectionist pressures, the most recent revisions come at a great time for the American homebuilding industry. The National Association of Home Builders in the United has been adamant about the need for lumber imports to meet domestic demand. They also estimate that, of the approximately 33 percent of lumber imported last year, 95 percent came from Canada.
Economists have long agreed on the benefits of eliminating tariffs. While this latest revision shows a step in the right direction, the continued insistence on lumber duties—especially in the wake of rising lumber demand due to natural disasters—remains concerning to those who favor free markets and mutually beneficial, harmonious trade.
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