The long running Canadian - U.S. lumber dispute appears to finally be over. A deal announced Thursday will return to Canada some $4 billion of the $5 billion collected in tariffs by the U.S. It also removes the tariffs. There are restrictions that have been placed and it seems that Canada will have to control its export of lumber to the U.S. This is basically a protectionism move by the U.S. and it seems that Canada is willing to accept that in order to remove some of the uncertainty in the lumber industry. Although the U.S. lost every decision by the world courts, they continued to charge the tariffs against Canadian lumber. Although this settlement isn't the decision some were hoping for, I think everyone involved is happy that it is over. At least lumber producers know what the rules are now and can adjust there production and exports accordingly - uncertainty has been at least partially removed.
Several Canadian lumber producers in B.C. have opened lumber mills in U.S. border towns over the last several years. They were able to ship raw lumber over the border, which is taxed at lower rates and then transform the raw lumber in the U.S. into building products that would have been taxed/tariff at much higher rates. They were able to effectively avoid some of the tariff issues. It will be interesting to see what will happen to some of these border town lumber mills in the next couple of years. I can see an argument either way. These lumber companies could decide that since the tariffs have been removed it no longer makes sense to keep a lumber processing facility just across the border in the U.S. and they will shut these facilities down. However, it could go the other way. Removing the tariffs reduces costs to Canadian lumber exporters and they could decide it makes sense to increase the amount of lumber exported and processed in their U.S. border town facilities. Some of this depends on the details of the agreement and what is allowed and not allowed. All of the details are not known yet.
Read more: Bellingham Herald
Read more: How this might impact Canadian lumber company in Sumas, WA
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