In February 2024, officials for the U.S. Department of Commerce indicated they would raise tariffs this year on imports of Canadian softwood lumber products from 8.05% to about 14%. The department made good on that promise in recent weeks, raising tariffs to 14.54%. The move follows the department’s fifth administrative review of its softwood lumber anti-dumping and countervailing duty orders, which it initiated in March 2023, announcing preliminary findings at the beginning of February 2024. On August 19, the agency issued the final results on antidumping and countervailing duties, averaging a combined total of 14.54%.
The new rate will be applied retroactively to exports from Canada made in 2022 and will apply to new exports to the U.S. from companies that were subject to reviews.
Mary Ng, Canada’s Minister of Export Promotion, International Trade and Economic Development, referred to the increases as “baseless and unfair,” suggesting that U.S. duties on softwood lumber “unjustifiably harm consumers and producers on both sides of the border.” According to Ng, the change will negatively impact U.S. consumers and businesses that need Canadian lumber, “making housing even less affordable for Americans.” Officials for the U.S.-based National Association of Home Builders (NAHB) echoed Ng’s sentiment.
While the move is part of a regularly scheduled review process the U.S. employs to ensure adequate relief to American companies and industries impacted by unfair trade practices, NAHB officials have actively fought against such measures, arguing they’re detrimental to housing. Tariffs, the association argues, impact affordability—a factor that continues to dog new home sales.
According to NAHB officials, lumber tariffs “act as a tax on American builders, home buyers and consumers,” by adding to the cost of construction for single-family homes.
The NAHB/Wells Fargo Cost of Housing Index (CHI) found that in the second quarter of 2024, a family earning the nation’s median income of $97,800 must spend 38% of its income to cover the mortgage payment associated with a median-priced new home.
With housing affordability near a historic low, NAHB called on the Biden administration to suspend tariffs on Canadian lumber imports into the U.S. The administration should instead enter into negotiations with Canada on a new softwood lumber agreement, NAHB officials suggested, while moving to eliminate tariffs altogether.
Meanwhile, there are indicators suggesting that the issue of affordability is easing. A Home Price Index released by the Federal Housing Finance Agency (FHFA) recorded a decline in home prices for June 2024. Since June 2023, the index has increased steadily in the year-over-year growth rate, but the growth rate began slowing in March 2024 and has continued to decelerate through June.
“We continue to work with our allies in Congress to put pressure on the administration to take action,” NAHB officials say.
In Canada, Ng vowed to “fight for the best interest of Canadians and continue to use all available avenues to vigorously defend the workers, businesses, and communities who rely on softwood lumber for their livelihoods,” including litigation under NAFTA and the Canada-United States-Mexico Agreement, at the U.S. Court of International Trade and at the WTO.
“It is in the best interests of both Canada and the United States to find a lasting resolution to this long-standing dispute,” Ng said.