Prime Minister Mark Carney’s decision to offer over a billion dollars for Canada’s softwood lumber industry has a developer concerned funds will be perceived as subsidies causing uncertainty for exporters relying on business with the United States.
The federal government recently announced a $700 million plan to establish a safety net of loans for the forestry sector and $500 million for product development grants, market diversification and worker retention to shield the industry from American duties and fees.
“I think the Prime Minister is doing what he can and trying to put his arms around the industry the best he can. The problem with what he’s doing a little bit here (is that it) could be read as another subsidy, and that’s what this whole thing is about,” Amar Doman, founder and CEO of Doman Building Materials, told BNN Bloomberg in a Thursday interview.
“It’s about our stoppage system and about how we unfairly dump lumber into the states. We’ve got to be a little careful if we’re throwing more, call it money, to the sawmill industry. Even though it may be required for some of them that have weaker balance sheets, I understand that, but we might get back into hot water and get viewed as more subsidies, and that’s not what we need.”
Carney’s pledge came after the U.S. imposed anti-dumping duties on Canadian softwood. American policymakers, for many years, have claimed Canadian manufacturers s softwood at prices below market value thanks to government subsidies. Industry officials, however, warn the duties put Canadian jobs at risk, and deny American dumping claims.
Researchers with the Montreal Economic Institute (MEI) say the Canada-U.S. softwood lumber dispute is good for neither country. They said the drop in Canadian production has direct consequences on this country’s forestry industry, and is not offset by the increased production south of the border, which leads to a net loss in the volume of wood available in the American market.
“Following trade tensions in 2016, duties on softwood lumber reached 20.83 per cent,” said Olivier Rancourt, economist at MEI, in a 2022 news release. “One might have imagined that after decades of disputes over softwood lumber, successive U.S. administrations would finally have understood the counterproductive nature of tariffs, both for producers and for consumers.”
The argument comes amid broader trade tensions as U.S. President Donald Trump implemented 35 per cent tariffs on some imports, further straining a relationship between the two nations.
“What we don’t like about all the tariff talk, and I think every business can say this no matter where you’re sitting, is the uncertainty,” said Doman. “We hate using that word, but that’s the word of the day. Everybody is just kind of sitting on their hands and what that does is that cascades down into the mortgage markets, the housing market... what we do like ahead of us is the interest rate outlook. It looks like a couple of ticks down in the U.S. The mortgage rates are already starting to drop.”
Doman said he‘s encouraged by the fact that trade deals have been announced by other countries with the U.S. He added that he hopes Ottawa and Washington can strike a deal soon, regardless of what it entails, so businesses can run their operations with more certainty.
With files from Reuters
