Stacks of lumber are unloaded and moved around the sorting yard at the WFP Duke Point Sawmill in Nanaimo, B.C. The U.S.-Canada softwood dispute dates back to the early 1980s, with the spat intensifying since 2017.James MacDonald/The Globe and Mail
Canadian softwood producers have now paid more than US$8-billion in U.S. duties since 2017, as British Columbia’s Forests Minister seeks to keep lumber on Ottawa’s radar to resolve the trade dispute.
The issue of Canadian softwood shipments into the U.S. is not directly addressed by the United States-Mexico-Canada Agreement, or USMCA, also known as CUSMA. The trilateral trade deal is up for review this year.
“We’ve been very clear with the federal government that we believe for British Columbia, no CUSMA deal will be successful unless it includes resolving softwood,” B.C. Forests Minister Ravi Parmar said in an interview.
“Ottawa does forget about B.C. a lot. It’s why we continue to make noise.”
U.S. reduces duty rates on Canadian softwood but levies still hefty
Canadian lumber producers continue to pay the punitive duties, which are cash deposits held in trust by the U.S. that collect interest.
Mr. Parmar said it is important to recoup a significant portion of the cash deposits to allow Canadian producers to reinvest that money in their operations. “A lot of money right now is sitting at the border, with no one being able to access it,” he said.
About US$2-billion in interest has gradually piled up over the past nine years, bringing the value of duties paid plus accumulated interest to more than US$10-billion, according to forestry consultant Paul Krabbe.
The cross-border softwood dispute dates back to the early 1980s, with the spat intensifying since 2017.
B.C. is the largest lumber-producing province. But softwood production has plunged in B.C. amid timber supply constraints over the past decade.
Some Canadian-based companies have increased their presence in U.S. forests and gained the side benefit of lumber production at their American operations being exempted from duties.
The powerful U.S. Lumber Coalition has been an effective lobby group, and remains suspicious that most forests in Canada are on Crown land, where buyers pay “stumpage fees” to provincial governments for the right to log.
That is in contrast with the U.S., where most timber is on private property and companies pay market rates to harvest, American producers say.
U.S. lumber group expands list of complaints against Canadian softwood producers
The BC Council of Forest Industries, the BC Lumber Trade Council and an array of industry groups in other provinces maintain that U.S. import taxes on Canadian softwood are unjustified.
Through the USMCA’s appeal process, Canada and the U.S. agreed to set up trade panels to settle disputes, as they had under the pact’s predecessor, the North American Free Trade Agreement.
The Canadian government is continuing to challenge lumber duties through the USMCA, which took effect in mid-2020.
Last week, the U.S. Department of Commerce said it plans to decrease duties for most Canadian softwood producers. New duty rates are intended to take effect by late summer or early autumn of 2026, subject to further revisions in a final determination.
U.S. import taxes on softwood lumber currently total 45.16 per cent on most Canadian producers, including combined countervailing and anti-dumping duties of 35.16 per cent and tariffs of 10 per cent.
In its announcement last Thursday for preliminary revisions, the Commerce Department said it expects to decrease the anti-dumping duty rates to 10.66 per cent from 20.53 per cent.
Most Canadian producers also face paying 14.17 per cent for countervailing duties, down slightly from 14.63 per cent, based on the preliminary determination.
The revised anti-dumping and countervailing duties equal 24.83 per cent, and when combined with the tariffs, the levies would total 34.83 per cent.
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The Commerce Department’s administrative review is based on lumber markets in 2024.
U.S. President Donald Trump announced tariffs on lumber and other wood products last fall against Canada and other countries. He cited Section 232 of the Trade Expansion Act, which allows him to invoke national-security concerns to impose tariffs.
Mr. Krabbe estimates that Canadian producers have paid US$133-million in those tariffs since last October.
Softwood production from U.S. sawmills recently accounted for about 72 per cent of American domestic consumption. Canada accounted for 21 per cent of U.S. lumber consumption, while other countries had a market share of about 7 per cent.
The share of U.S. consumption satisfied by Canadian sawmills has steadily eroded from 33 per cent in 2016.
The Commerce Department’s administrative review into softwood markets in 2024 levied different duty rates on a preliminary basis on Vancouver-based companies Canfor Corp. and West Fraser Timber Co. Ltd.
Canfor would see its total levies decline to 31.02 per cent, down from the current 47.59 per cent. West Fraser’s duties would decrease to 20.70 per cent, compared with the current 26.47 per cent.
The duty rate for Resolute FP Canada Inc., a subsidiary of Domtar Corp., would drop to 24.95 per cent from the current 35.16 per cent.