U.S Investigates Lumber Imports, Considers New Tariffs

U.S. President Donald Trump on Saturday initiated a new trade investigation that could lead to additional tariffs on imported lumber, further escalating trade tensions. The move adds to existing duties on Canadian softwood lumber and the 25% tariffs set to take effect next week on all Canadian and Mexican goods.

In his third tariff-related probe within a week, Trump signed a memorandum directing Commerce Secretary Howard Lutnick to launch a national security investigation into U.S. lumber imports under Section 232 of the Trade Expansion Act of 1962. This provision, previously invoked by Trump, was also used to justify tariffs on global steel and aluminium imports.

The decision underscores the administration’s continued focus on trade protectionism and its potential impact on North American trade relations.

The probe covers derivative products made from lumber, which could include furniture such as kitchen cabinets, which in some cases are made of U.S. lumber that had been exported.

The order said the Commerce Department investigation must be completed within 270 days.

Trump also ordered new steps within 90 days to increase the domestic supply of lumber by streamlining the permitting process for harvesting lumber from public lands and improving the salvage of fallen trees from forests and waterways.

The order calls for new or updated agency guidance to facilitate increased timber production, including quicker approvals for forestry projects under the Endangered Species Act.

White House trade adviser Peter Navarro said the lumber import probe would counteract the actions of big lumber exporters, including Canada, Germany and Brazil, which he said were “dumping lumber into our markets at the expense of both our economic prosperity and national security.”

“That stops today with a pair of Trumpian actions designed to both bolster supply of and demand for American timber and lumber,” he told reporters on a conference call ahead of the signing.

A White House official said that increasing reliance on imported lumber represents a possible national security risk partly because the U.S. military consumes significant quantities of lumber for its construction activities and because increasing dependence on imports for a commodity with ample domestic supplies is a danger to the U.S. economy.

The official did not provide details on a proposed tariff rate under the Section 232 lumber probe, but Trump earlier this month told reporters that he was thinking about imposing a 25% tariff rate on lumber and forest products.

The official said any tariffs resulting from the probe would be added to the existing 14.5% combined anti-dumping and anti-subsidy duties on Canadian softwood lumber.

These were the result of a long-running U.S.-Canada trade dispute over Canada’s low stumpage fees on public lands, which Washington argues is an unfair subsidy. Most U.S. lumber is harvested from private land at market-determined rates. Home builders have long criticised the tariffs as raising lumber prices and contributing to home price inflation.

The official said the new lumber duties also would stack on top of Trump’s threatened 25% general U.S. tariffs on all Canadian and Mexican goods that are scheduled to take effect on Tuesday unless Trump is persuaded by the two countries’ efforts to secure their borders and halt fentanyl trafficking.

REUTERS