Trade: Tough Tariff on Soft Wood

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A trade squall blew across the northern border last week. In a sudden reversal of position, the Commerce Department declared Canada was unfairly subsidizing exports of softwood lumber to the U.S., an activity that was worth more than $2.8 billion last year. In response, the Reagan Administration said it would impose a 15% countervailing duty, which is expected to cause the cost of new U.S. housing to rise by $1,000 a unit or more.

The decision will mainly benefit lumber companies in the American Northwest, which have chafed as the Canadian share of the U.S. softwood lumber market has risen from 19% in 1975 to 33%. But the tariff announcement stirred resentment in Ottawa, where it was pointed out that the U.S. Commerce Department three years ago found the same Canadian export practices to be acceptable. Canadian International Trade Minister Patricia Carney said the latest decision "cannot be justified" and added that her government would "pursue all avenues available to us to argue against this determination." There were worries that the softwood-tariff announcement would compromise delicate free-trade negotiations that have been going on between the two countries since last May.