MINNEAPOLIS (CBSMiami/AP) — The timber industry in the Midwest is welcoming the Trump administration’s move to impost tariffs averaging 20 percent on softwood lumber coming into the United States from Canada.
The industry has been struggling in Minnesota and Wisconsin in recent years. The housing market crash in 2008 cut demand for softwood lumber products such as pine 2×4 studs and other kinds of boards used to build homes, which are among the products affected by the administration’s move. So industry groups in both states saw Monday’s announcement as good news for communities with sawmills, and for loggers who supply them.
The Trump administration and U.S. industry groups say Canada unfairly subsidizes its softwood lumber industry. The dispute goes back to the 1980s. The U.S. contends that the prices charged by Canadian federal and provincial governments for harvesting timber on public land are below market rates, amounting to a subsidy that puts U.S. companies at a competitive disadvantage.
Canada denies that its practices are unfair and greeted the announcement with dismay. Natural Resources Minister Jim Carr said Tuesday that the new tariffs will hurt people in both countries, including American homebuyers who will now pay more for wood.
According to the U.S. Commerce Department, imports of softwood lumber from Canada were worth an estimated $5.66 billion last year. The duties, which Commerce Secretary Wilbur Ross said Tuesday will cost about $1 billion annually, will range from 3 percent to 24 percent, depending on the manufacturer.
The cross-border flare-up happened against the backdrop of the Trump administration’s intent to renegotiate the North American Free Trade Agreement, which doesn’t cover the lumber dispute, and a separate trade dispute over Canadian dairy pricing. It doesn’t directly affect the paper industries in the two states, which are larger than their lumber industries and mostly use hardwoods such as aspen, but loggers who typically work for both sectors stand to gain.
The old U.S.-Canadian softwood lumber agreement worked well until it expired in 2015, resulting in no limits on the amount of lumber that could be imported from Canada, said Wayne Brandt, executive director of the Duluth-based Minnesota Timber Producers Association. That, combined with exchange rate differences, made it challenging for U.S. producers to compete, he said.
“Our preference is always that there be an agreement worked out between the two countries so we can have a rational system for pricing products to the market. … Maybe this will spur the Canadian producers to come to the table and arrive at an agreement,” Brandt said.
But for now, the regional industry is welcoming the crackdown.
“It’s about time. This will be good for Minnesota and the timber industry. It’s been frustrating to the timber industry for years to see full rail cars heading south from Canada,” said Scott Dane, executive director of the Gilbert-based Associated Contract Loggers and Truckers of Minnesota.
Minnesota has lost seven major mills since the housing market crashed, Dane said. That cost the state about 25 to 30 percent of its total logging workforce. No more than 1,500 people now work directly on the logging side, he said, but they supply paper and lumber mills with a total workforce of around 40,000, he said.
Wisconsin had about 135,000 jobs in the overall forest products industry, including wood and paper, in the mid-2000s, said Henry Schienebeck, executive director of the Great Lakes Timber Professional Association, based in Rhinelander, Wisconsin. It’s just getting back to 62,000 jobs now, he added.
Loggers that supply Wisconsin’s mostly smaller sawmills should benefit, Schienebeck said. He also said much of the pine that Wisconsin loggers cut gets trucked out of state to larger Potlatch Corp. sawmills in Bemidji, Minnesota, and Gwinn, Michigan, that should benefit as well.
“I’m hoping this is going to have a real positive impact on our loggers and sawmills,” he said.
(© Copyright 2017 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)