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The impact of high taxes on Canadian lumber exports to the U.S.

Jan. 11, 2017 - The topic of export duties on Canadian lumber exports to the U.S. is now revving up, given the announcement by the US ITC this week.

On Jan. 9, 2017, the US International Trade Commission (US ITC) ruled on its Preliminary Determinations regarding injury from the imports of softwood lumber products from Canada. The U.S. Department of Commerce (DOC) is to continue conducting its countervailing (CVD) and antidumping duty (ADD) investigations on U.S. imports of lumber from Canada and to recommend export duties.

On Thursday, May 4, 2017, 2017, the DOC’s Final Determination on a countervailing duty determination is due – the same day its preliminary antidumping duty determination will be announced.

The results of these investigations will trigger market chaos, as Canadian mills will need to try to dramatically increase U.S. lumber prices to counter the effects of punitive export duties. A combined duty of 30+% is now expected and the impact of the duty is expected to cause some Canadian mills to curtail and even close permanently. At the same time, a greater focus on off-shore export markets is expected by Canadian mills to reduce their dependence on the U.S. market – this is expected to cause some disruptions in the Chinese market (as outlined in WOOD MARKETS 2017 – the Five-Year Outlook).

On Tuesday, May 9, 2017, and against the uncertain lumber trade environment, British Columbia will hold its next provincial general election. This, in conjunction with President-elect Trump, will add more political drama to the lumber business and trade.

On Thursday, May 11, 2017, WOOD MARKETS will be hosting its 7th Annual Global Softwood Log & Lumber Conference at the Hyatt Regency Hotel in Vancouver BC. This conference will be extremely timely, as some key milestones will have just been passed – including the amount of the CVD duties – and this will be first time to have an open discussion on what these events will, or could, mean.

The expected impacts of export duties on Canadian lumber shipments to the U.S. and the ripple effect of the duties into export markets will be two major themes of the Vancouver Conference. Coupled with these questions will be assessments of how or where the U.S. will get all of its lumber requirements, at what price, and how offshore exporters fit in. Similarly, what will Asia look like as Russians and Canadians ramp up export volumes and where will other log and lumber exporters fit in?

It is going to get complicated and volatile, so listening to a variety of experts and networking with informed delegates will be one way to get a unique perspective on all of the various scenarios and implications.

January 11, 2017  By Russ Taylor Wood Markets International

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