On Monday, the United States government invoked a trade law it had never used before. Section 338 of the 1930 Tariff Act allows a US president to impose duties of up to 50% on any country judged to be treating American commerce unfairly, without needing approval from Congress. It had sat unused for 96 years. This week, President Donald Trump applied it to Canada, placing a 50% tariff on close to $20 billion worth of Canadian goods \u2014 wine, cement, hockey sticks and more. Softwood lumber and timber were left off the list.<\/p>\n
The exemption is procedural rather than generous. Each of the three proclamations signed on Monday specifically excludes goods already covered by Section 232, the national-security tariff regime under which Washington placed a 10% duty on Canadian timber and lumber last October, alongside a 25% charge on wood furniture items such as cabinets and vanities. Because lumber was already caught in that earlier action, it could not also be folded into this week's broader measure. <\/p>\n
For producers on the Canadian side of the border, that means no new tariff, but no relief either. Canadian softwood shipped into the US still carries an antidumping duty of 20.56% and a countervailing duty of 14.63%, on top of the existing 10% national-security tariff \u2014 a combined rate above 35%. The US Commerce Department has proposed lowering the antidumping and countervailing components to 10.66% and 14.17% respectively, which would bring the combined add-on closer to 24.83%, but that determination is not expected to be finalised until next month at the earliest, and would still sit on top of the national-security tariff rather than replace it.<\/p>\n
A law with no precedent, and a month to argue about it<\/strong><\/p>\n Because Section 338 has never been tested, trade lawyers anticipate legal challenges, and the mechanism itself builds in a delay: the new duties do not take effect until 19 August, giving both governments roughly a month to negotiate before anything changes on the ground. That timeline overlaps with ongoing talks between Washington and Ottawa on steel, aluminium, cars and softwood lumber, all part of a wider review of the North American trade agreement that Canada's trade representative, Dominic LeBlanc, has been pushing forward since early July.<\/p>\n Canadian Prime Minister Mark Carney described the tariffs as another instance of unilateral American trade action that raises costs on both sides of the border, and said Canada remains willing to continue negotiating with Washington, even as domestic political pressure builds for a firmer response.<\/p>\n Two American industries, two opposing arguments<\/strong><\/p>\n Even with lumber excluded from the new measure, the debate over existing duties continued on the same day. The US Lumber Coalition, which represents American softwood producers, argued that years of tariffs and duties have already done useful work, pointing to a decline in Canada's share of the US lumber market from around 35% to roughly 19%. Its executive director, Zoltan van Heyningen, has argued that Canadian producers benefit from state subsidies and should scale back their own capacity rather than expect the US market to absorb it.<\/p>\n Homebuilders see the same numbers differently. The National Association of Home Builders has spent months arguing that lumber and other building materials should be removed from tariff lists altogether, estimating that existing duties and tariffs have added somewhere between $10,000 and $10,900 to the cost of a new home in the US. Framing lumber prices have risen more than 30% since their December low, and Canadian softwood shipments to the US fell 28% in the twelve months to January \u2014 even before this week's announcement. Canadian mills still supply around three-quarters of the softwood the US imports, leaving producers heavily exposed to shifts in American trade policy.<\/p>\n A separate legal question hangs over the older, October tariff. That measure was issued under a different law \u2014 the Trade Expansion Act of 1962 \u2014 from the one used this week. Earlier this year, the US Supreme Court ruled that the administration could not rely on emergency-powers legislation to justify a separate set of tariffs, but it has not yet ruled on whether the 1962 law can be used the way the White House has used it. Unless a court intervenes, the October tariff is set to expire on 1 January 2027.<\/p>\n How markets read it: West Fraser Timber case<\/strong><\/p>\n Investors treated the lumber exemption as a mild positive for the sector, though a narrow one. West Fraser Timber, the largest lumber producer in North America and one of the companies most exposed to any softwood-specific measure, still saw its shares underperform on the day, reflecting how tightly linked forest-products stocks are to any US tariff announcement touching Canada \u2014 even one that spares their core product. Most of what West Fraser and similar Canadian producers sell into the US falls outside the new 50% tariff's scope, since the products actually named on the list \u2014 packaging paper, tissue, and certain specialty engineered wood items \u2014 are either sold mainly within Canada or represent a small share of total revenue for the larger softwood exporters. Oriented strand board, market pulp and standard softwood lumber were left off the list entirely.<\/p>","protected":false},"excerpt":{"rendered":" On Monday, the United States government invoked a trade law it had never used before. Section 338 of the 1930 Tariff Act allows a US president to impose duties of up to 50% on any country judged to be treating … Continue reading