The Canadian trade minister says 'extremely disappointed' that the US decided to increase duties it is imposing on Canadian softwood lumber from most producers to 17.9%.

In a statement, it read... “Canada’s softwood lumber industry is an economic anchor for communities across the country and a key component of Canada’s forestry sector, which contributed more than $25 billion to the country’s GDP in 2020 and employed nearly 185,000 workers. The United States has long relied on Canadian lumber products to meet its domestic needs for high-quality building materials.''...

Read the full statement and quick fats in the following link. 

Quick facts 

• On November 24, 2021, the US. Department of Commerce issued the final results of the second administrative reviews of its anti-dumping and countervailing duty orders regarding certain softwood lumber products from Canada.
• Going forward, the new combined “all others” rate that will apply to exports from companies that are subject to the second administrative reviews is 17.9%. The current “all others” rate for most companies is 8.99%. 
• Following completion of any legal challenges under the Canada-United States-Mexico Agreement’s (CUSMA) Chapter 10 or in US courts, these new anti-dumping and countervailing duty rates will apply retroactively to softwood lumber exports to the United States from companies that were subject to the second administrative reviews.
• The US Department of Commerce conducts an annual review of anti-dumping and countervailing duty orders. The annual review process is similar to the process used for initial investigations but applies only to companies that are subject to review.

Market implications

We have seen this before from the US and this is just the latest volley in the long-running lumber trade dispute between the two countries. US President Donald Trump went down this line also when he was in power during a decades-long dispute over trade between the two nations. 

The lumber disputes have been a significant trade irritant between the US and Canada since Confederation 150 years ago. This specific dispute, however, dates back over 30 years to the early 1980s.

Therefore, this should come as no surprise but it will be something to keep an eye on over the coming sessions to see how things develop in terms of risk apatite surrounding the Canadian dollar.