(Reuters) -The Canadian government on Tuesday launched a challenge against American duties on Canadian softwood lumber under the terms of the U.S.-Mexico-Canada (USMCA) trade deal, Canadian Trade Minister Mary Ng said in a statement.
The softwood lumber industry is a key component of Canada's forestry sector, which contributed more than $25 billion, about 1.5%, to the nation's gross domestic product in 2020 and employed nearly 185,000 workers.
The U.S. Department of Commerce nearly doubled its duties on imported Canadian softwood lumber to 17.9% in November after a review of its anti-dumping and countervailing duty orders regarding certain softwood lumber products from Canada.
The United States accuses Canada of unfairly subsidizing and dumping softwood lumber, which is commonly used to build homes. Canada denies it is dumping.
Ottawa is challenging the results of the U.S. review under USMCA's chapter 10 provisions, according to a statement from Canada's government, in which Ng called the duties "unjustified" and said she was "extremely disappointed" about them.
"Canada reaffirms its call for the United States to stop imposing unwarranted duties on Canadian softwood lumber products," Ng said.
The Office of the U.S. Trade Representative and the Commerce Department did not immediately respond to a request for comment.
The BC Lumber Trade Council, a key trade group in the Canadian province of British Columbia, came out in support of the challenge and said it hoped "the U.S. industry will end this decades-long dispute and instead work with us to meet demand for the low-carbon wood products the world needs, including American families." B.C. accounts for 16% of North America's softwood lumber supply.
The Trump administration initially imposed 20% duties on Canadian softwood lumber in 2018 after the collapse of talks on a new quota arrangement, but reduced the level in December 2020 to 9%. President Joe Biden's administration had stuck to those duties until the Commerce Department's recent review.
(Reporting by Ismail Shakil in Bengaluru and David Ljunggren in Ottawa; additional reporting by Kanishka Singh;Editing by Mark Porter, Bernadette Baum and Paul Simao)