New Nafta Could Settle Canada-U.S. Lumber War, Resolute CEO Says

  • Tariff will only increase cost of homes, according to Garneau
  • U.S.investigating allegations Canadian timber subsidized

Trucks deliver raw lumber at a mill in Thunder Bay, Ontario, Canada.

Photographer: James MacDonald/Bloomberg

A renegotiation of Nafta could be used to settle a lumber dispute that’s been simmering between Canada and the U.S. for decades and threatens to make housing unaffordable for thousands of Americans, according to the world’s largest newsprint maker.

The Canadian government will probably want lumber included in a new North American Free Trade Agreement, Richard Garneau, chief executive officer of Montreal-based Resolute Forest Products Inc., said by phone. “I think that makes sense,” he said.

The U.S. has initiated an investigation into softwood lumber imports amid allegations Canadian timber is heavily subsidized and shipments are harming U.S. mills and workers. President Donald Trump has also signaled that the U.S. may seek more favorable terms in trade pacts such as Nafta.

A previous softwood lumber agreement expired in October 2015. That was followed by a 12-month moratorium, during which Canada was able to continue shipping lumber tariff-free.

The U.S. relies on softwood lumber from Canada and punitive tariffs on imports will raise the cost of homes for U.S. consumers, Garneau said. “Every time you increase the cost of a house by $1,000 there’s 150,000 Americans that cannot afford to buy a new house,” he said.

Tighter restrictions on lumber imports from Canada could mean tighter supplies and higher prices, Bloomberg Intelligence analyst Joshua Zaret said in a Nov. 17 report. A builder pays approximately $15,000 for softwood lumber used to build an average, single-family home and restrictive agreements that impose quotas, tariffs and other border tax measures limit the supply of lumber, which hurts housing affordability, according to the Washington-based National Association of Home Builders.

Resolute fell 18 percent to C$1.31 in Toronto at 2:38 p.m. , the biggest drop in a year, after reporting a surprise fourth-quarter adjusted loss.

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