As U.S. Increases Tariffs On Canadian Lumber, Vermont Companies Wait For Fallout

Jun 28, 2017

The U.S. Commerce Department this week slapped a new round of tariffs on Canadian lumber coming into the states, and companies in Vermont are anxious to see how it could affect business.

The move by the Trump administration follows a similar round of duty increases issued in April, meaning some Canadian wood products now carry tariffs as high as 30 percent.

At Cersosimo Lumber in Brattleboro, general manager Jeff Hardy says about 25 percent of the company's white pine goes into Canada.

Cersosimo sends rough sections of white pine up north where it's made into window frames, molding and door jams.

Then American wholesalers buy that finished product back from Canadian companies.

And so Hardy says when the U.S. government slaps an extra tariff on the wood that comes into this country, it complicates the whole process:

"I think for our company we have to ride this ship out and see where it lands," Hardy says. "There's a lot to be seen coming up. The jury's kind of out right now to figure this out."

The U.S. Commerce Department says Canadian companies operate with an unfair advantage, because their government subsidizes the industry.

Stacks of white pine are lined up along a building at Cersosimo Lumber in Brattleboro. Some of the company's wood goes up to Canada and comes back into this country as finished product.
Credit Howard Weiss-Tisman / VPR

But the decision to impose these new tariffs could be good for some American companies.

Hardy says it could help when he's competing with Canadian companies that want to sell the same white pine lumber down here in the States.

"I think for our company we have to ride this ship out and see where it lands. "There's a lot to be seen coming up. The jury's kind of out right now to figure this out." - Jeff Hardy, general manager at Cersosimo Lumber

But he says the trade war is creating uncertainty, and there's already been some fallout from the earlier tariff that was imposed in April.

"It's very hard to buy and sell lumber if you don't know what the true cost is," says Hardy. "So now, everybody's reluctant to take  possession of anything they don't have to. But then when you have to buy something to keep your facility going, you may have agreed on a price, but there may be a 30 percent change of price that you're responsible for. That's a real wet blanket on anybody's business."

And that "wet blanket" puts a damper on business beyond the lumber industry.

Jeff Keller is with Northeastern Retail Lumber Association, which represents lumber yards in Vermont and around the Northeast.

White pine logs are lined up at Cersosimo Lumber. White pine is one of the softwoods that are covered in the Canadian tariff increase.
Credit Howard Weiss-Tisman / VPR

Keller says when wood products don't move, contractors don't work. Furniture makers see a slow down and the stores that he represents don't sell all of the other materials that are used in construction projects.

"If they're not able to sell the lumber then the nails and screws and everything that go in with the building aren't going to be sold as well," Keller says. "So when you have a slowdown of one material it can affect every type of material."

Keller's organization says the tariff controversy is one of the longest-running bilateral trade disputes, dating back about 35 years. They say the most recent actions by the U.S. government have already increased the price of softwood lumber to consumers by about 26 percent.