THUNDER BAY — The Domtar sawmill, formerly Resolute sawmill, in Thunder Bay exports almost 90 per cent of its produced softwood lumber to the U.S., and like the many other Northwestern Ontario mills in the forestry sector, will likely not feel serious impacts from the U.S. government's imposed 25 per cent tariffs, a local union official says.
The impact is expected to be felt by the Americans.
Stephen Boon, the northern area director for the Unifor union, called the pending 25 per cent tariff on softwood lumber a "double whammy" as lumber producers deal with existing tariffs.
Boon explained that currently there are two duties on softwood lumber, including a 7.66 per cent anti-dumping duty, which is a trade measure that involves taxing imported goods to prevent them from being sold at prices that are too low.
The second is a countervailing duty of 6.74 per cent, which is a duty that a government imposes to protect domestic producers by countering the negative impact of import subsidies.
Together, they account for 14.4 per cent of softwood lumber duties.
"That number does fluctuate slightly from producer to producer," Boon said, adding there has been a new assessment which is done every year. "They just increase the anti-dumping rate from 7.66 up to 20.07, which is supposed to take effect later this year, and we are challenging it."
The rate will jump from 14.4 per cent to 26.81 per cent, (20.07 per cent plus 6.74 per cent) in November.
"If Trump comes out with his 25 per cent tariffs, that would be on top of that, which would drive the rate up to almost 52 per cent," he said.
Boon said most of the companies he works with through Unifor, typically tack on the duties to their price.
"If the U.S. starts applying these new 25 per cent tariffs, then that will have to be tacked onto the price too," he said. "The plan right now is just pass it on to the consumers, the people, the wholesalers and the consumers that buy the lumber and be paying the bulk of the new tariffs.
Boon said U.S. President Donald Trump wants to free up federal lands for harvesting, which is what Canada is doing currently. He's trying to push the U.S. timber industry towards the core of a Canadian model.
"Trump has said it many times that he doesn't need (Canada's) lumber while we still provide the U.S. with 25 per cent of it. You can't just remove 25 per cent of your lumber and be fine with everything that's going on with fires in Los Angeles and hurricanes in Florida," Boon said, calling Trump's claims a "bluster."
"It's not a factual statement. They do need our lumber, and even if he tries to open up federal forests for logging, it's not something that's going to happen overnight."
He added it would take a tremendous financial investment into the industry, and with "all the turmoil and talk about recession in the U.S.," Boon wondered what lumber company is going to make that kind of investment.
He also noted that the imposed tariffs will drive the price of lumber up, causing U.S. producers to react to the "threat and supply," and increase their prices.
"At the end of the day, the victim is going to be the Canadian or the American consumer, the person trying to rebuild their house in Los Angeles or Florida," Boon said. "They're going to be paying the increased costs."
Local Journalism Initiative / The Chronicle Journal
