Higher softwood lumber tariffs cost Irving $30M since last year

Higher U.S. tariffs introduced on softwood lumber have cost J.D. Irving Ltd. $30 million since the dispute first started in May of 2017.

J.D. Irving Ltd. expects the number to jump to $45M by the end of the year

J.D. Irving Ltd. expects to pay $45 million in U.S. tariffs this year. (Nicolas Steinbach/Radio-Canada)

Higher U.S. tariffs introduced on softwood lumber have cost J.D. Irving Ltd. $30 million since the dispute first started in May of 2017. 

J.D. Irving, which is the largest lumber producer in New Brunswick, expects that number to jump to $45 million by the end of the year.

Forest NB said that by the end of 2017, all of its members, including JDI, had paid a combined $31 million in tariffs. That was for the first eight months of tariffs.

Jérôme Pelletier, vice-president of the sawmills division for JDI, said the tariffs are a significant additional cost to the company and have a negative impact.

JDI's special rate

JDI pays a more favourable combined countervailing and anti-dumping duty rate of 9.92 per cent, while other sawmill owners in the province pay 20.83 per cent. (Nicolas Steinbach/Radio-Canada)

New Brunswick was the only Atlantic Canadian province not exempt from the tariffs the U.S. imposed earlier this year.

While JDI was able to recieve a lower combined countervailing and anti-dumping duty rate of 9.92 per cent, all other sawmills in the province must pay a rate of 20.83 per cent.

The impact of these tariffs has been tempered by a growing need for softwood lumber, which has driven up prices of the resource by an average of 25 per cent.

Mike Legere, the executive director of the Forest NB, said while this has helped shield some of the blow from the tariffs profit margins for sawmills have declined because of the tariffs.

Lower investment

Industry experts fear that lower profits will mean less money will be spent on modernizing. (Nicolas Steinbach/Radio-Canada)

Decreased profit can also have a negative impact on investment in infrastructure and research and development.

JDI owns 11 sawmills in New Brunswick, Nova Scotia and Maine. Pelletier said the tariffs have meant less modernization work at the mills.

Michel Soucy, a professor of forestry economics at the University of Moncton, said the loss of profits will limit the industry's ability to develop further or modernize.

Corrections

  • An earlier version of this story said incorrectly that higher U.S. tariffs introduced on softwood lumber in January have already cost J.D. Irving Ltd. $30 million this year. In fact, it has cost $30 million since the dispute first started in May of 2017. The earlier version also stated JDI negotiated a lower rate, when in fact it received a lower rate after a challenge.
    Jul 13, 2018 7:55 AM AT

With files from Nicolas Steinbach & Radio-Canada

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