A move by the U.S. Commerce Department to increase preliminary tariffs on softwood lumber imports from Canada, if finalized, will raise producer costs and cut into their profits but is unlikely to affect prices to consumers of wood products, analysts say.
The department’s recommendation to more than double the “all others” preliminary countervailing and anti-dumping rate to 18.32 per cent from 8.99 per cent on Friday drew criticism from the Canadian government and industry and applause from the lumber industry south of the border.
The increase is unlikely to result in higher lumber prices because they’ve more than doubled in the past year to all-time record highs, said Kevin Mason, managing director of ERA Forest Products Research.
“Prices are supply-and-demand driven,” he said. “(Tariffs) drive the cost up for producers but it’s not going to affect prices.”
Because it’s a preliminary tariff rate, current cash deposit rates will continue to apply until the finalized rates are published, likely in November.
“U.S. duties on Canadian softwood lumber products are a tax on the American people,“ said Mary Ng, minister of Small Business, Export Promotion and International Trade, in a statement.
“We will keep challenging these unwarranted and damaging duties through all available avenues. We remain confident that a negotiated solution to this long-standing trade issue is not only possible, but in the best interest of both our countries.”
In a note to investors, RBC analyst Paul Quinn said finalized rates from the previous administrative review process wound up being largely in line with the preliminary rates.
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