NCPA - National Center for Policy Analysis

Canadians Seething Over U.S. Lumber Tariffs

September 9, 2002

In May, the U.S. levied a 27 percent tariff on Canadian softwood lumber imports. The tariffs have led to the closing of some Canadian sawmills and the loss of timber industry jobs.

  • Annual Canadian softwood lumber sales to the U.S. amount to between $6 billion and $12 billion and supply about one-third of American needs.
  • In June, Canadian softwood sales to the U.S. plunged 40 percent -- shrinking the country's trade surplus and signaling that a recession may have descended on its lumber sector.
  • Some 70,000 Canadian jobs are directly involved in softwood production and it is estimated 25,000 of them could be lost if the dispute goes on for more than two years.
  • The dispute arises from the fact that the world is awash in lumber, prices are down and mills on both sides of the border have been closing.

In the U.S., most timberlands are privately owned -- with harvesting rights auctioned off or sold at market rates. But in Canada, more than 90 percent of timberlands are owned by provincial governments that set cutting fees. The governments adjust the fees and otherwise regulate cutting and manufacturing in such a way as to guarantee employment in remote rural areas.

American companies and officials say Canadian timber fees are so low as to amount to a 27 percent subsidy -- hence, the size of the tariffs.

Source: Clifford Krauss, "Trees Fall in Canadian Forests, But U.S. Isn't Buying," New York Times, August 31, 2002.


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