The U.S. president announced countervailing duties of up to 24 percent on softwood lumber from Canada on Monday, drawing rebuke and a threat of legal action from the northern neighbor. While it could have been worse — Canadian lumber shares surged Tuesday because the tariffs turned out to be less severe than some expected — it won’t be quick. The last softwood spat ran from 2001 to 2006.
“This isn’t an easy fix,” Derek Nighbor, chief executive officer of the Forest Products Association of Canada, told Bloomberg TV Canada Tuesday. He said Canada can’t appeal duties until they’re finalized early next year. In the meantime, the duties could mean an extra C$500,000 ($370,000) or more a month for a single Canadian mill. “These are very significant costs, and businesses are going to have to figure out: How do you manage through this? How do you cash-flow through this?”
Among the next steps the U.S. may take are anti-dumping duties, with a decision due June 23, and finalized duties expected by January of 2018.
Trump, who last week pledged to fight Canada’s dairy quotas, is igniting tension between the two countries just as the U.S. is expected to trigger a 90-day notice period to start talks over the North American Free Trade Agreement. Negotiations look sure to run into Mexico’s presidential cycle in 2018, with U.S. midterm elections due later that year and a Canadian election due in 2019.
The lumber spat has been simmering a long time, and it’s not just a fight between Trump and Canadian Prime Minister Justin Trudeau. U.S. industry needs to approve any deal.
“The Obama administration was essentially acting as a go-between” in talks between Canada and industry, former U.S. ambassador to Canada Bruce Heyman said in a Bloomberg TV interview. Trump is hurting the chances of a deal by stoking rhetoric, he said. “It’s just a huge mistake, to take your best friend and next door neighbor and start poking at them really hard,” he said.
Canada’s government was coy on what its next steps would be, particularly on any challenge through the World Trade Organization or through Nafta itself, as it has done in the past.
“Canada always wins these,” James Blanchard, a former U.S. ambassador to Canada and ex-governor of Michigan, said in an interview Tuesday at the Great Lakes Economic Forum in Detroit. “Hockey is not our favorite pastime,” he said, referring to Americans. “Litigation is.”
Read the whole article on Bloomberg