U.S. Commerce Secretary Wilbur Ross has stated that a 20% tariff will be applied to Canadian exports of softwood lumber, the Wall Street Journal reports. The tariff will be applicable retroactively for the past 90 days according to DowJones. That is a marked turnaround from a prior Department of Commerce decision that a decision would not be made until June 23 at the request of complainants. The hawkish tone follows recent comments from President Donald Trump regarding dairy farming, and sets an aggressive tone vs. Canada ahead of NAFTA renegotiations.

The move will have a noticeable impact on the Canadian economy. Lumber represents 7.9% of Canadian exports, and the country can ill-afford a reduction given its exports are already falling excluding energy. Panjiva data shows Canadian supplies fell 16% in February from their September peak, with seaborne shipments by the big four suppliers ( Tolko, Canfor, West Fraser and Interfor) having fallen a further 5% in March.

Chart based on dollar value of softwood lumber imports involved in ITA case Source: Panjiva