U.S. Panel Locks in Final Tariffs on Canadian Softwood Lumber

The U.S. locked in final tariffs on softwood lumber from Canada, ratcheting up economic pressure with a top trading partner and showing the Trump administration's determination to punish what it sees as unfairly traded imports.

The U.S. International Trade Commission, a bipartisan panel that reviews trade matters, on Thursday voted to confirm that Canadian imports do harm the U.S. lumber industry. The Commerce Department a month ago issued a final determination that Canada subsidizes its forestry industry and dumps lumber on the U.S. market at unfairly low prices, and the department issued final tariffs of 20% or more, depending on which Canadian mill saws the lumber.

Canada has already challenged the U.S. lumber tariffs through two international dispute-settlement procedures, calling the duties "unfair, unwarranted and deeply troubling." U.S. home builders have also criticized the tariffs, which can boost the price of lumber and raise the cost of building homes.

The dispute is expected to further add to tensions between the U.S. and Canada, which are in the midst of negotiating, with Mexico, a rewrite of the North American Free Trade Agreement.

Protecting lumber mills is aligned with Mr. Trump's "America first" trade policy, and lawmakers from timber-growing areas of the Southeast and Pacific Northwest have made it clear they support a tough line with Canada to protect American mill workers and timberland owners. The Commerce Department sets out strict rules for avoiding political influence or undue industry interference in tariff cases; still, Secretary Wilbur Ross has greeted his agency's steps toward final tariffs with fanfare.

U.S. mills applauded the decision.

"Now, with a level playing field, the U.S. lumber industry...can have the chance to compete fairly," said Jason Brochu, co-chairman of the U.S. Lumber Coalition and co-president of Pleasant River Lumber Co. in Maine.

Last month, Canada filed for the creation of an expert panel under Nafta to determine on whether the duties are justified under law. That move could redouble the determination of U.S. trade representative Robert Lighthizer, who has sought to eliminate the dispute-resolution system that allows the three countries to challenge each other's tariffs under Nafta's Chapter 19. Canada also kicked off a process to challenge the tariffs at the World Trade Organization, the global trade arbiter that is under increasing pressure from the Trump administration.

In testimony this week before lawmakers, Canada's chief Nafta negotiator, Steve Verheul, said the softwood dispute between the U.S. and Canada "will continue to be a difficult issue" and said it is unlikely a solution will be incorporated in any renegotiated continental trade pact.

Canada's attempt to quash the softwood lumber duties is in line with what observers describe as an aggressive "Canada First" approach on trade from the Liberal government led by Prime Minister Justin Trudeau, whether on issues regarding softwood lumber, aerospace and the Nafta renegotiations in general.

Mr. Verheul said this week some of the proposals put forth by the Trump administration on Nafta are "wholly unworkable." Prime Minister Justin Trudeau's Liberal government is also facing pressure from the Trump administration on aircraft exports from Bombardier Inc. and Canadian rules that limit the import of U.S. milk and dairy products.

In 2016, Canada exported rough $5 billion in softwood lumber to the U.S.

Write to William Mauldin at william.mauldin@wsj.com and Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

December 07, 2017 12:29 ET (17:29 GMT)