On April 24, 2017, the U.S. Department of Commerce
its affirmative preliminary determination about the need for countervailing duties (CVD) to be collected for certain types of Canadian softwood lumber. As a result of the determination, the Department will instruct U.S. Customs and Border Protection to require cash deposits based on these preliminary rates, which vary for five Canadian producers and are at the subsidy rate of 19.88 percent for all other producers/exporters. The merchandise covered in the announcement includes softwood lumber, siding, flooring and certain other coniferous wood ("softwood lumber products").
MHI has long advocated that consumers need access to a stable, dependable and affordable lumber supply. Canadian imports of softwood lumber account for as much as one-third of the lumber used in the construction of manufactured homes. MHI is concerned that these tariffs on softwood lumber will have negative repercussions for consumers because of the increased cost of materials. According to the Department of Commerce, imports of softwood lumber from Canada in 2016 were valued at an estimated $5.66 billion.
MHI has joined the American Alliance of Lumber Consumers, which is a coalition of business groups who support open trade in lumber and building materials. In addition to MHI, founding members of the AALC include the National Association of Home Builders, the National Retail Federation, and the National Lumber & Building Material Dealers Association. The coalition released the following statement in reaction to the Department of Commerce's announcement:
"The American Alliance of Lumber Consumers believes that unilaterally imposing punitive tariffs is counterproductive and could create large and unpredictable swings in the cost and supply of lumber. We urge the U.S. and Canada to work quickly and cooperatively to achieve a long-term solution to resolve this ongoing trade conflict."
The homebuilding industry relies on Canadian softwood lumber and has long supported trade agreements that recognize the need for Canadian supplies of timber to meet U.S. building needs. At the end of 2016, a nine-year softwood lumber agreement between the U.S. and Canada, which established a system of fees and quotas on Canadian imports to the U.S., expired. U.S. and Canadian trade negotiators worked for months to reach a new softwood lumber agreement but the negotiations failed. During these negotiations, the price of softwood lumber from Canada soared. Per the Chicago Mercantile Exchange, softwood lumber prices are up 30 percent since February.
The Department of Commerce is scheduled to announce its final CVD determination on September 7, 2017. This final determination will be based on the verification of the information provided to the Department for the preliminary ruling, comments by the parties, and further analysis. Cash deposits on imports of softwood lumber will be required until the determination is made, at which time they could be refunded, remain at the same level set by the preliminary determination, or increased - depending on the final determination.
MHI will continue to work with the American Alliance of Lumber Consumers to advocate for a softwood lumber trade resolution that makes this important material available to manufactured home builders at a reasonable cost.