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Softwood lumber tariffs: sword of Damocles still hangs over industry

Montreal, June 20, 2017 – The antidumping duties on Canadian softwood lumber that will be announced Friday by the United States, which could be as high as 10%, will once again penalize Canadian workers and American consumers, according to calculations carried out by the MEI.

Added to countervailing duties of around 20% imposed by the United States in April 2017, this new protectionist measure could reduce Canadian producers’ market share. This share was just 27% one month after the imposition of the tariffs, whereas it averaged 32% in 2016. This drop in market share represents monthly losses of $102 million across Canada, including $66 million in British Columbia and $16 million in Quebec.

“The tariffs are already having negative effects, but it is still too soon to evaluate these effects over the long term since there is much uncertainty in the market, with each player pursuing its own strategy,” explains Alexandre Moreau, Public Policy Analyst at the MEI. “For the moment, the weakness of the Canadian dollar, the strong demand on the American side, and high prices are allowing Canadian producers to partially absorb the effect of the tariffs.”

American consumers, for their part, have certainly felt the effects of this uncertainty. Between January and May 2017, the price of softwood lumber increased by 17% due to speculation and the imposition of tariffs on Canadian softwood lumber. It now costs American consumers an additional US$2,400 for the construction of a single-family home in the United States.

“We all lose with protectionism,” adds Mr. Moreau. “Only a small group of American producers will reap additional net benefits thanks to their lobbying efforts, but this comes at the expense of the majority.”

The American market represents nearly 75% of Canadian softwood lumber exports, and 24,300 direct jobs depend on this market. Forest regions are particularly affected by these protectionist measures.

“Politicians on both sides of the border have a duty to resist the influence of lobby groups that want to impose obstacles to free trade. They need to come to the defence of the millions who pay the price for protectionism,” concludes Michel Kelly-Gagnon, President and CEO of the MEI.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

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Interview requests: Pascale Déry, Senior Advisor, Communications, Current Affairs, MEI, Tel.: 514-273-0969 ext. 2233, Cell.: 514-502-6757, Email: pdery@iedm.org

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