US to Double Duties on Canadian Lumber Trade

The US decision to more than double countervailing duties on Canadian softwood lumber imports has shifted an already tense US and Canada trade relationship into much rougher territory. The U.S. Department of Commerce confirmed the move, lifting the countervailing duty rate from 6.74% to 14.63%. Add that to the 20.56% anti-dumping duties announced just weeks earlier, and Canadian softwood lumber now faces a 35.19% combined rate when crossing the border.

For some companies, the financial hit is far steeper. Canfor Corporation tops the list with a combined rate of 41.67%, while West Fraser Mills will see a rate of 16.50%. Most other exporters are lumped into the “All Others” category at 27.30%. US Customs and Border Protection has been instructed to collect at the new rates immediately, with the anti-dumping increase already in effect.

US and Canada Over Softwood Lumber Dispute

Canada moved quickly to respond. Prime Minister Mark Carney announced a Canadian $1.2 billion support package. It will be spent on the Canadian softwood lumber industry, including $ 700 million in loan guarantees and $ 500 million earmarked for product innovation and market expansion. British Columbia’s Minister of Forests, Ravi Parmar, called the duties “absurd and reckless.” The BC Council of Forest Industries argued they hurt communities on both sides of the border. The BC Lumber Trade Council pointed to higher construction costs in the United States and more pressure on forestry-dependent regions in Canada.

The U.S. Lumber Coalition, meanwhile, says the numbers prove their case. Executive Director Zoltan van Heyningen called the Canadian industry a bad actor in unfair global trade. Hence, their claim of a 35.19% rate is justified. US industry representatives highlight that domestic mills have expanded capacity by 8.8 billion board feet since 2016. It has produced an extra 30 billion board feet in that time, enough for two million new single-family homes.

Section 232 Tariff Review Looms

The ongoing Section 232 investigation ordered by President Trump is still underway. It could add even more tariffs if lumber imports are deemed a national security concern. USMCA exemptions don’t apply here. This is because softwood lumber duties are handled separately under global trade remedy laws. It’s another chapter in a dispute that has been simmering since the 1980s, rooted in US claims that Canadian government ownership of forests amounts to unfair subsidization, claims Canada rejects.

Canada’s strategy now includes market diversification. In the past year, the share of Canadian softwood lumber headed to the US has dropped from 78% to 68%. Canada is shifting its marketing towards Europe and Asia. Prime Minister Carney says the goal is to rely more on Canadian lumber for Canadian projects. For US homebuilders, the stakes are high too. Projections suggest the tariffs could add up to $14,000 to the price of a new home by 2027. This cost, the National Association of Home Builders says, will ultimately be passed on to American buyers.