Skip to main content

The Globe and Mail

U.S. imports of German softwood up tenfold as duties weigh on Canada

A worker in a small boat moves logs on the Fraser River at the Delta Cedar Sawmill in Delta, B.C., on January 6, 2017.

Darryl Dyck/The Canadian Press

U.S. imports of softwood from Germany have grown tenfold in the first half of the year as punishing duties pushed imports of Canadian softwood down.

RBC Capital Markets analyst Paul Quinn estimates Canadian lumber producers have plunked down $500-million so far in countervailing and antidumping duties since the spring.

The U.S. alleges Canada unfairly subsidizes its softwood industry and has slapped on import taxes averaging 26.75 per cent as punishment.

Story continues below advertisement

Canada disputes the U.S. assessment but cannot officially challenge the U.S. tariffs until after final decisions are made about the level of duties to be imposed some time this fall.

Canada and the U.S. are trying to negotiate a new softwood trade deal to replace one that expired in 2015, but thus far have been unable to come up with a plan acceptable to the U.S. Lumber Coalition.

In the meantime, Canadian companies are paying duties and prices are rising, making imports from places like Germany suddenly more attractive.

"When Canadian lumber is more reasonably priced it's not that viable of an option," said Jerry Howard, CEO of the National Home Builders Association in the U.S.. "The Germans this time were poised to take advantage of it and I think that they have."

In the first six months of this year, German softwood imports into the U.S. soared more than 900 per cent over the same period last year.

Germany's share of imports rose from 0.35 per cent in the first six months of 2016, to 3.6 per cent this year.

Overall, U.S. imports of softwood were up three per cent over the first six months of the year.

Story continues below advertisement

However Canadian shipments were down one per cent.

As a result, Canada's share of U.S. softwood imports fell to 92 per cent from 96 per cent.

Richard Walker, a spokesman for the Forest Products Association of Canada, said Canada's softwood exports were growing before the duties were imposed at the end of April. In May and June they fell.

"It's the American consumer who has been paying the price to date as lumber prices have gone up in anticipation of the duties," said Walker.

Germany wasn't the only beneficiary. Austrian softwood imports were up 178 per cent, Romania was up 141 per cent, Russia 42 per cent and Sweden 41 per cent.

Howard estimates the softwood dispute has pushed prices for home builders up 20 per cent, which means new homes are costing U.S. consumers more and more Americans will be priced out of the market.

Story continues below advertisement

"If our own forestry practices in the United States were more modernized and more state of the art we could probably produce almost enough lumber to satisfy our needs, but right now we have to supplement our own domestic harvests somewhere," he said.

Quinn used the average duties imposed and multiplied it by the amount of wood exported to estimate as of now, Canadian producers have paid close to $500-million in duties as of August.

The second quarter reports for six of the country's biggest softwood producers show the impact of the duties up to the end of June. Canfor deposited the most at $34.8-million, followed by West Fraser which paid $34-million. Resolute has deposited $4-million, Interfor $7.3-million, Western Forest Products $9.2-million and Conifex $4.6-million.

Most companies are being asked to pay the duties retroactively for 90 days. Interfor's quarterly report suggests that could amount to another $11.4-million for it alone.

The duties deposited are held in trust by the United States until all Canada's appeals are completed. If Canada and the U.S. reach a settlement agreement, that agreement will likely dictate where those duties end up.

The last time there was a softwood trade dispute, the U.S. collected $5.2-billion in duties over five years and the settlement in 2006 included a clause that the U.S. would repay $4.5-billion of it.

Video: Softwood lumber tariffs ‘consistent’ with U.S. approach: Trudeau (The Canadian Press)
Report an error
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.