Mathew Wight restocks cut wood Tuesday at Hammond Lumber in Portland. President Trump said Monday night that punitive duties on Canadian softwood products will begin next week, in retaliation for perceived unfair subsidies provided by provincial governments there. Staff photos by Derek Davis

Maine sawmill owners are welcoming the Trump administration’s announcement that it is imposing stiff duties on imports of Canadian softwood lumber, intensifying a longstanding trade dispute with the United States’ largest trading partner.

President Trump revealed the decision to a gathering of conservative journalists Monday night, pre-empting the Commerce Department, which had planned to make the announcement Tuesday. Starting next week, the department will impose duties of 3 percent to 24 percent on softwood 2-by-4s, planks and other lumber arriving from Canada. The punitive duties are retaliation for Canadian provincial governments allegedly providing unfair subsidies to their industry.

The action might raise the price of house framing lumber made from spruce, fir, pine and other softwood trees, but Maine’s sawmill owners are greeting the news with a sigh of relief.

“What we’ve desired all this time is a level playing field, and news like this gives us confidence,” said Jason Brochu, co-president of Pleasant River Lumber, which employs 300 people at sawmills in Dover-Foxcroft, Jackman, Hancock and Sanford. “With a strong presence from the government and such an emphasis on trade and jobs, it is timed perfectly for us to expand our operation and increase employment, which is exactly what we are going to do.”

U.S-owned lumber companies have pushed for countervailing duties for years via an ad hoc association, the U.S. Lumber Coalition, which also has claimed Canada is dumping softwood lumber on the U.S. market below cost.

The announcement of new duties “is a very solid and very good outcome which will help level the playing field from unfair Canadian imports that have been devastating to U.S. jobs, communities and owners,” said Zoltan van Heyningen, the coalition’s executive director. “This was not a knee-jerk thing. It was a result based on a long and careful investigation.”

‘CANADA DISAGREES STRONGLY’

The duties vary based on the level of subsidies the Commerce Department believes a given Canadian producer has received. Most firms face a 19.88 percent duty, but the duties against West Fraser Mills and the Canfor Corporation of British Columbia are set at 24.12 percent and 20.26 percent, respectively.

The Maine Forest Products Council says many of its members – like Twin Rivers Paper Co., whose lumber products were available at Hammond Lumber on Tuesday – own mills and forest property on both sides of the border.

One firm has an extremely light penalty: J.D. Irving, the New Brunswick-based wood products powerhouse that is the largest landowner in Maine. Its duty is just 3.02 percent, reflecting the fact that most of its timber comes from privately owned forests, rather than the provincial public forests that critics say are charging too little for logging rights.

J.D. Irving also owns some of the largest sawmills in Maine, demonstrating the complexity of the cross-border lumber trade in a state where the closest sawmill may be in another country.

Ottawa reacted angrily to the news and vowed to defend an industry that exports 70 percent of its production to the United States.

“The government of Canada disagrees strongly with the U.S. Department of Commerce’s decision to impose an unfair and punitive duty,” federal Foreign Affairs Minister Chrystia Freeland and Natural Resources Minister Jim Carr said in a joint statement. “The accusations are baseless and unfounded.”

NB Forests, the trade association of New Brunswick’s forest products industry, did not respond to an interview request.

Lloyd Irland, a forest products and timber consultant in Wayne who has worked for both U.S. and Canadian clients, said it isn’t at all clear that Canadian sawmills have unfair advantages, especially when it comes to the fees they pay to cut public forests – “crown lands” in Canadian parlance. “The crown forests out there are often very remote – it’s often small trees and long hauling distances – and so the (timber) just isn’t worth that much,” he said. “There are irritants in the trading relationship, but it’s hard to make a blanket statement that the Canadians are trading unfairly on the resource.”

He also noted that J.D. Irving and other Canadian firms have invested in sawmills in Maine, which wouldn’t make a lot of sense if they were getting timber at a cut rate in their own backyard. “Why are they competing with themselves?” he asked rhetorically.

While the softwood tariffs please Maine-owned sawmills, the state’s forest products industry as a whole is divided on the issue.

“We have commerce going back and forth between Quebec and New Brunswick, and we have members who own mills and forest property on both sides of the border,” said Patrick Strauch, executive director of the Maine Forest Products Council, which also represents paper mills, loggers, landowners and wood pellet plants. “We certainly understand the members who want to have a level playing field, but we have to understand that up in the northwest corner of the state, some of the closest mills to the landowner community are just across the border in Quebec and of interest to some of our members.”

LONG-SIMMERING TRADE DISPUTE

The softwood trade dispute, which has been simmering on and off for decades, is one of the most contentious between the largest trading partners in the world. A 1996 agreement that established quotas and tariffs on Canadian imports expired in October 2015, allowing Canada to export lumber tariff-free for one year while the parties negotiated. When they failed to come to a new agreement last October, interests such as the U.S. Lumber Coalition were free to file fresh trade grievances.

Mathew Wight works at Hammond Lumber’s Portland warehouse on Tuesday. While some Maine manufacturers celebrated news of a U.S. tariff on Canadian lumber, a forest-products industry consultant said “it’s hard to make a blanket statement that the Canadians are trading unfairly.”

Maine sawmills employed 1,996 people last year, down from 2,365 in 2001, according to state labor statistics. The state’s lumber and solid-wood products sector – which includes plywood and furniture – has an annual output of $1.1 billion and supports more than 11,000 jobs, according to the forest products council. Harvesting operations – which cut trees bound for paper mills, wood pellet makers and firewood dealers as well as the lumber trade – employ another 2,200.

Maine imported $168 million worth of wood construction products in 2016, $158 million of that from Canada, according to WISERtrade, a trade analyst service. China was the second-largest exporter to Maine, at $4.7 million.

EFFECTS ON CONSUMERS AREN’T CLEAR-CUT

Canada provides a third of the lumber used in the United States as a whole, and 95 percent of the imported lumber.

In contrast to Maine sawmill owners, the National Association of Homebuilders said it was “deeply disappointed” with the Trump administration’s announcement, calling it a “short-sighted action” that “will negatively harm American consumers and housing affordability.”

The homebuilders said it takes 15,000 board feet of wood to build a typical American home and that, after lumber prices spiked 22 percent in the first quarter of the year, the price of a new house increased by $3,600.

The U.S. Lumber Coalition’s van Heyningen disputed those calculations. “The average cost of the dimension lumber in a U.S. home is about 2 percent of the overall cost of construction, so the impact of bringing about fair trade is negligible at best or near zero for consumers,” he said. The housing association, he said, included in its calculations a range of non-softwood wood products that are not affected by the tariffs.

Irland, the forest products and timber consultant, said it wasn’t yet clear what effects the tariffs would have on U.S. softwood lumber prices, which are a commodity set by a variety of market forces. But even if prices did increase by 20 percent, the effect on would-be homeowners would be small.

“It’s a small portion of the price of a new home,” he said. “But if you’re building hundreds of thousands of homes a year in the country, it does add up.”

Colin Woodard can be contacted at:

[email protected]