The Canada-U.S. softwood lumber fight, which is heating up again, dates back to the early 1980s.Justin Sullivan/Getty Images
Viewed through the lens of cross-border trade, a film scene underscores the persistence of the Canadian government wanting to dance with its protectionist southern neighbour.
But the powerful U.S. government holds the upper hand in the bilateral trade dispute over softwood lumber.
While the battle has featured complex and arcane legal arguments by both sides, a simpler explanation of the long-running fight comes from an unlikely source: Hollywood fiction.
The essence is inadvertently captured in a scene from the racy 2019 romantic comedy Long Shot, which stars Canadian actor Seth Rogen, who is also the movie’s co-producer.
In the film, Charlize Theron plays U.S. Secretary of State Charlotte Field, and actor Alexander Skarsgard plays Canadian Prime Minister James Steward.
Ms. Theron’s American character views Mr. Skarsgard’s Canadian character as predictable, and she mockingly delivers the punchline: “Let me guess: You want fewer restrictions on lumber.”
In real life, Canadian lumber producers are still predictably seeking to remove trade barriers in the softwood fight, which dates back to the early 1980s. But the influential U.S. Lumber Coalition has been an effective lobby group over the decades, winning political backing from federal U.S. senators and members of the House of Representatives who are keen to protect sawmill jobs in rural areas in softwood-producing states.
The lingering dispute revolves around U.S. restrictions on Canadian sales of softwood to American buyers. The United States believes that the measures are necessary to protect its lumber industry, because Canadian forests are mostly on public land, where buyers pay “stumpage fees” to provincial governments for the right to log.
Washington argues those fees are too low and give Canadian loggers a competitive advantage over U.S. producers, which harvest timber largely from private lands and bid against each other for the privilege.
The U.S. Department of Commerce is expected to release its next preliminary duty rates on lumber in early May, or 90 days later than originally planned. Its sixth administrative review is based on lumber markets in 2023, when prices were low.
Analysts say U.S. duty rates imposed on Canadian softwood could double in 2025 and reach nearly 30 per cent. That is based on a historical pattern of higher duties whenever there are low prices in lumber markets.
The anticipated increase in duty rates would likely take effect by November, 2025.
While benchmark lumber prices have rallied since mid-2024, they are still down nearly 70 per cent from the record highs attained in the spring of 2021.
The impact of lower lumber prices and reduced timber supplies already has been severely felt at smaller companies based in British Columbia. Teal-Jones Group and San Industries Ltd. filed for bankruptcy protection in 2024 under the Companies’ Creditors Arrangement Act.
B.C. sawmills that were shut down or had production scaled back in the past year include those owned by major players such as West Fraser Timber Co. Ltd. and Canfor Corp.
Still, softwood shipments from Canada remain crucial to filling a U.S. void, because domestic production is unable to meet demand south of the border.
The U.S. government – swayed by the U.S. Lumber Coalition – has long argued that Canadian producers receive unfair provincial softwood subsidies and dump product. Mary Ng, Canada’s Export Promotion Minister, has countered that international panels have consistently ruled in favour of Canada as a fair trading partner.
The latest cross-border clash over softwood is the fifth round in the battle, known in the forestry industry as Lumber V – borrowing from the Roman numeral style for the National Football League’s Super Bowl game.
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An agreement that was reached in 2006 after a dispute known as Lumber IV expired in October, 2015. The Commerce Department began imposing duties in 2017 on shipments of Canadian softwood.
The accumulated duties paid by Canadian softwood producers since 2017 are now valued at more than US$7-billion, including interest on payments held in trust by the U.S.
Kurt Niquidet, president of the BC Lumber Trade Council, said Canadian sawmills have seen their market share of U.S. lumber consumption steadily eroded. Amid Canadian timber constraints, that share has fallen to an estimated 24 per cent, compared with nearly 33 per cent in 2016.
U.S. president-elect Donald Trump said in late November that he would impose 25-per-cent tariffs on all goods imported from Canada and Mexico soon after he takes office in January.
“We’ve got a new administration coming in the U.S. and so there is going to be a new dynamic,” Mr. Niquidet said. “The cost of those tariffs would get passed through, into the consumer prices.”
Forestry industry experts say there is the risk that tariffs in general, possibly at lower rates than those threatened by Mr. Trump, could be added on top of U.S. duties already slapped on Canadian softwood.
The Canadian Forest Owners – a group that represents private forestry landowners in this country – has joined the federal and provincial governments in sounding the alarm about potential U.S. tariffs.
Paul Jannke, a Forest Economic Advisors lumber economist based in Massachusetts, said the proposed tariffs are likely a negotiating tactic. Still, if tariffs of at least 10 per cent are imposed, it would translate into reduced shipments from Canada into the U.S. and higher lumber prices, Mr. Jannke said.
Producers with Canadian head offices recently controlled 22 per cent of total U.S. sawmill capacity, based on data compiled by Forest Economic Advisors.
The U.S. South has become an important lumber supplier in North America. Over the past dozen years, Canadian-based companies have increased their presence in the region’s forests and gained the side benefit of production at their U.S. operations being exempted from duties.
Even though the U.S. South has lower operating costs than British Columbia, the region has experienced a series of shutdowns and reduced output at sawmills amid weak market conditions. Mills in the U.S. South affected include ones owned by Canadian-based companies such as West Fraser, Canfor and Interfor Corp.
While the softwood battle is persistent, a skirmish over Canadian newsprint in 2017-18 turned out to be brief. Canadian manufacturers teamed up with U.S. newspaper publishers and printers to help successfully fight to have U.S. duties on uncoated groundwood paper, including newsprint, overturned. Canadian newsprint accounted for almost two-thirds of U.S. demand in 2018, and the fight was resolved relatively quickly, with U.S. newspaper publishers having the ear of Congress.
In the U.S. Department of Commerce’s latest rate revision in September, the combined countervailing and anti-dumping duties totalled 14.4 per cent for most softwood from Canada, down slightly from 14.54 per cent in August, but up sharply when compared with 8.05 per cent in early 2024.
U.S.-headquartered lumber producers and timberland owners who complained about Canadian softwood ended up receiving 10 per cent of the US$5-billion in softwood duties paid in the previous round of the dispute, from 2001 to 2006.
Canadian companies recouped 80 per cent of the funds while 9 per cent went to “meritorious initiatives” in the U.S., with the remaining 1 per cent allocated to promoting lumber in both countries.
This time around, Vancouver-based forestry analyst Russ Taylor said, it’s unclear how much Canada will recover in U.S. duties already paid since 2017.
“Canada will get some of the duties back – maybe 80 per cent, but maybe 60 or maybe 50 per cent,” Mr. Taylor cautioned. “Once the duties are on, it’s very hard to get them off.”