Late last month, we learned that the US government had decided to double the duty on Canadian softwood lumber to a combined rate of 17.9% for most producers. Canadian forestry sector companies will be hit hard by this measure, given that the United States is the main importer of our softwood lumber.
When a market is as integrated on a continental level as the softwood lumber market, trading partners should consider each other as equivalent and not impose customs duties on the resource. Indeed, this misguided US policy will only lead to higher building costs for US companies and consumers, who are already enduring pandemic-related price hikes of late.
On this topic, the National Association of Home Builders expressed its concern regarding the increased cost of houses related to the prices of building materials in the United States. In a sense, the US president is asking consumers and buyers of real estate to indirectly subsidize the American forestry industry, because they’re the ones who pay those higher lumber prices.
In a situation of strong demand for softwood lumber, the American population could certainly benefit from affordable, quality Canadian lumber. But instead of taking stock of the situation, the government south of the border preferred to wave the flag of economic nationalism and raise prices for ordinary Americans.
Faced with this decision, the Canadian government has rightly decided to challenge the American position before the courts, as it goes against the very principle of free trade. After all, protectionist measures are not the road to sustainable economic prosperity, and the Canadian government must not fall into the trap of emulating the United States in this regard.