The United States’ new tariffs on softwood lumber, which have added a global 10 per cent levy on top of countervailing and anti‑dumping duties, have raised costs for exporters and renewed scrutiny of how Washington calculates dumping margins. Taken together, the measures have effectively pushed direct and indirect taxes on Canadian suppliers above 40 per cent, with critics arguing that the measures reflect a choice of calculation rather than clear evidence of misconduct.
That is according to Alice Palmer, a freelance researcher and consultant with a PhD in forestry, an MBA and more than 20 years in the Canadian forest sector, who called the national‑security rationale “ludicrous,” before adding that “using national security as an excuse for tariffs is transparent political theatre.”
Palmer’s work focuses on the Commerce Department’s use of a contested practice called “zeroing” when it computes anti‑dumping margins. Zeroing treats U.S. sales priced above an exporter’s domestic average as if they do not exist, preventing higher‑priced transactions from cancelling out lower‑priced ones and making ordinary short‑term price dips look like systematic dumping: “Zeroing removes the balancing effect of higher‑priced transactions and injects an obvious statistical bias that overstates dumping,” Palmer said.
As one of the world’s most traded commodities, lumber prices fluctuate daily due to rapidly changing supply and demand; mills sell at the current market rate rather than setting fixed retail prices. Anti‑dumping cases compare an exporter’s domestic “normal value” with its U.S. export price. When prices fluctuate, straightforward averaging typically allows highs and lows to offset each other, resulting in a zero dumping margin. But when investigators apply zeroing, market volatility can be turned into large calculated margins.
In the Commerce Department’s most determinations, this approach, combined in some cases with “constructed values” (manufacturing costs plus allowances) to represent domestic prices, produced anti‑dumping duties above 20 per cent.
Lumber prices spiked in late 2022 and then fell in 2023 while some Canadian cost inputs, notably stumpage fees, lagged. That mismatch made the constructed normal values appear high, while selling prices were low. “The high dumping margins calculated for 2023 are not reflective of Canadian mills exporting at unfairly low prices; they reflect market volatility and a lag in cost adjustments, not predatory pricing,” Palmer said. “Both Canadian and U.S. sawmills sometimes sell at low prices, but only Canadian mills are penalised.”
The wider market picture also undercuts claims that Canadian imports are the cause of U.S. oversupply. Since 2016, Palmer said U.S. producers have added 9 billion board feet of capacity, much of it in southern yellow pine, creating domestic oversupply and depressing SYP prices. Canadian shipments are dominated by spruce‑pine‑fir, a different species many builders prefer for framing; forcing substitution between species is neither straightforward nor always possible.
According to Palmer, zeroing has a long legal history and has been repeatedly challenged at the World Trade Organisation. Although some rulings allow limited use, the WTO appeals mechanism remains constrained. The immediate effects of the combined levies are higher costs for imported SPF, potential market disruption for Canadian exporters and upward pressure on U.S. construction input prices. Analysts and industry voices say policy would better serve the sector if it shifted from trade containment toward growing demand, product innovation and supply‑chain resilience. “If the goal is a stronger domestic industry, invest in market expansion, product innovation and supply‑chain resilience,” Palmer said.
- To learn more about anti-dumping and why the calculations are flawed, click here for Palmer’s Why Anti-Dumping Duties Make No Sense in Commodity Markets (Part 1) and US Duty Calculations on Canadian Lumber Are Flawed (Part 2).
