'It's very damaging to the business': U.S. lumber tariffs hit B.C. manufacturers hard

The softwood lumber tariffs imposed by the U.S. have many local businesses in B.C. worried for the future.

Producers look to other markets as business to U.S. slows

Tina Lovgreen · CBC News · Posted: Apr 26, 2017 10:17 AM EDT | Last Updated: April 26, 2017

Sukhi Brar, operations manager at Advance Lumber Remanufacturing in Surrey said he is worried about what the tariffs will do to business, but he is hopeful. (Tina Lovgreen/CBC)

New softwood lumber tariffs being imposed by the U.S. are already cutting deep into B.C. businesses.

Advance Lumber Remanufacturing in Surrey has been exporting pallets south of the border for the past two decades — but operations manager Sukhi Brar said his American customers haven't placed any orders for a week now.

"The stressful part is that we have no orders on file," said Brar. "It's a bit shocking ... this is our main source of income. It puts food on the table."

Before Monday's announcement packaged and unfinished pallets were under NAFTA. Now unfinished pallets are subject to tariffs. (Tina Lovgreen/CBC)

Before the tariffs were imposed, assembled and unassembled pallets were exempt from duties under the North American Free Trade Agreement. Now, the unfinished pallets are subject to duties ranging from three to 24 per cent.

"We are scared. I mean it's a big part of our business selling to the U.S.," said Brar, who estimates 40 per cent of his business is with the U.S.

Despite the shakeup, Brar said he doesn't expect any layoffs for his 125 employees.

The cost will be handed down to customers, who he hopes will come back once the dust settles.

"We're just trying to keep our fingers crossed and be optimistic for tomorrow," Brar said.

He said the family-owned company has diversified after the recession hit in 2009 and will rely on other sectors to survive.

The U.S. Department of Commerce announced its first batch of duties on Canadian softwood lumber imports on Monday. It ranges from three to 24 per cent depending on the companies and where they operate in Canada. (Tina Lovgreen/CBC)

It's a shift that many other businesses are also considering.

"We'll try to emphasize more of our other markets and see what we can do to try to continue shipments into the U.S., but it is very damaging to the business," said Hanif Karmally, CFO of Teal Jones Group.

Not over yet

The full extent of the blow hasn't even been dealt, as an anti-dumping duty is expected in June. A combined duty rate, to be determined in the fall, will follow.

"When they slap this 30 per cent on, that's a wall.- Chris Sainas, Dakeryn Industries

"The expectation by the industry is that it'll be 30 to 35 per cent in total," said Karmally.

"That would be pretty devastating. We're not sure how we would deal with that at this point."

"Right now, you have to have deep pockets to get through these times," said Chris Sainas, who specializes in Canada-U.S. exports for Dakeryn Industries.

"When they slap this 30 per cent on, that's a wall. You can't go over it, you can't go under it, you can't go through it and that's what we are facing right now."