MEI tallies the cost of softwood lumber tariffs

June 26, 2017

By: Montreal Economic Institute

MONTREAL — Possible antidumping duties on Canadian softwood lumber that could be imposed by the United States will once again penalize Canadian workers and American consumers, according to the Montreal Economic Institute.

Added to countervailing duties of around 20% imposed by the United States in April 2017, this new protectionist measure could reduce Canadian producers’ market share. This share was just 27 percent one month after the imposition of the tariffs, whereas it averaged 32 percent in 2016. This drop in market share represents monthly losses of $102 million across Canada, including $66 million in British Columbia and $16 million in Quebec.

“The tariffs are already having negative effects, but it is still too soon to evaluate these effects over the long term since there is much uncertainty in the market, with each player pursuing its own strategy,” explains Alexandre Moreau, public policy analyst at the MEI. “For the moment, the weakness of the Canadian dollar, the strong demand on the American side, and high prices are allowing Canadian producers to partially absorb the effect of the tariffs.”

American consumers, for their part, have certainly felt the effects of this uncertainty. Between January and May 2017, the price of softwood lumber increased by 17 percent due to speculation and the imposition of tariffs on Canadian softwood lumber.

“We all lose with protectionism,” adds Moreau. “Only a small group of American producers will reap additional net benefits thanks to their lobbying efforts, but this comes at the expense of the majority.”

The American market represents nearly 75 percent of Canadian softwood lumber exports, and 24,300 direct jobs depend on this market, according to MEI.

The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization.

By: Montreal Economic Institute

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