Canadian Companies Found to Be ‘Dumping’ Lumber in the U.S.

The Commerce Department ruled Friday that Canada was “dumping” lumber on the U.S. market at unfairly low prices, laying the foundation for permanent duties on the exports.

It was the second blow this week to relations between the world’s two largest trading partners, which are in the midst of negotiations to expand their 3-year-old free-trade agreement to include Mexico.

On Monday, the Customs Service ruled that Honda Civics assembled in Canada over a 15-month period do not qualify for duty-free treatment because less than 50% of their components are North American in origin.

In the lumber ruling, the Commerce Department said the Canadian government is unfairly subsidizing 14% of the cost of the country’s softwood exports.

The decision means that there will be little change in temporary duties the Commerce Department set Oct. 10, when it opened an investigation of the alleged dumping.

After the department makes a determination of the level of dumping, the issue will go to the U.S. International Trade Commission for a final decision on whether the Canadian subsidies are hurting the American lumber industry.

The ITC already has made a provisional ruling that the dumping is hurting the U.S. industry.

Canada had said that it almost certainly will appeal any duty imposed to a panel set up to settle disputes between the two countries.

Industry analysts said imposing duties on Canadian lumber could increase the price of a house built in the United States by as much as $1,000.

Lumber prices rose on the Chicago Mercantile Exchange after the announcement.