Developments in the U.S.-Canada Softwood Lumber Dispute

Photo by Radek Gryzbowski via Unsplash

Background

The 2006 Softwood Lumber settlement, which expired in 2015, marked the fifth “truce” in the ongoing dispute between Canada and the U.S. At the heart of the dispute is that the U.S. alleges Canadian stumpage fees—set by provincial governments rather than the market, as they are in the U.S.—constitute subsidies. 

Absent a negotiated agreement or “truce,” the U.S. levies countervailing (CVD) and antidumping (AD) against Canadian softwood lumber every year. Canada challenged these duties under the U.S.-Mexico-Canada Agreement (USMCA) in January 2024, making any duties collected by U.S. officials inaccessible to governments or lumber producers until that dispute has been resolved. Instead, collected duties sit in escrow. Since the U.S. presidential elections in 2024 and Trump's subsequent tariffs against Canada, this conflict has continued to escalate. Below is a summary of developments since December 2024.

Key Events Since the U.S. 2024 Elections

• Dec. 1, 2024 - U.S. Department of Commerce releases its 33rd Softwood Lumber Subsidies Report to Congress, identifying subsidies provided to the softwood lumber industry in 5 countries, including Canada.

• Feb. 1, 2025 - British Columbia (BC) Council of Forest Industries releases a statement highlighting the “devastating” impact of U.S. tariffs for Canadian forestry workers and the Canadian economy and calling for the U.S. and Canadian governments to collaborate to find a solution.

• Feb. 21, 2025 - U.S. Department of Commerce starts the 7th Administrative Review of AD and CVD duties for softwood lumber.

• Mar. 1, 2025 - White House announces the executive order entitled, "Immediate Expansion of American Timber Production."

• Mar. 1, 2025 - White House announces a Section 232 investigation on lumber and timber.

• Mar. 3, 2025 - U.S. Department of Commerce announces preliminary results of its 6th administrative review of AD duties, recommending duties be increased to 20.07% for most producers effective August 2025. The Premier of BC, David Eby, responds by calling the U.S.’s determination “a new, massive threat” to which “Team Canada” will “respond with strength.” Yet Premier Eby also highlights harm to American families from the duties and states Canada would prefer to work with, rather than against, the United States.

• Mar. 6, 2025 - White House delays 25% Canada border tariffs until April 2, 2025, for USMCA goods, including softwood lumber.

• Mar. 13, 2025 - Public comments for the Section 232 investigation opens with an April 1 closing date.

• Apr. 2, 2025 - White House exempts softwood lumber from the 25% Canadian goods tariff, but it still faces ongoing AD/CVD duties.

• Apr. 4, 2025 - U.S. Department of Commerce announces preliminary results of its 6th administrative CVD review, increasing the rate to 14.38% for most producers. Should these go into effect, most Canadian lumber producers will face a 34.45% tariff when exporting to the U.S. as of August 2025 (20.07% AD duties + 14.38% CVD duties). Premier Eby’s response was less measured this time, calling the announcement “an attack on forest workers” and stating Canada would stand together to “fight” the “increasingly hostile actions of our largest trading partner.”

• Apr. 7, 2025 - BC Premier David Eby meets with newly appointed Canadian PM Mark Carney, arguing softwood lumber needs to be defended just as Team Canada has defended the manufacturing and car industries. His subsequent statement says the PM confirmed his support for Canadian lumber.

• Apr. 10, 2025 - Government of BC directs provincial agencies to “use its purchasing power to exclude American suppliers” wherever possible. U.S. Lumber Coalition responds by strongly applauding President Trump’s tariff policy and the proposed AD/CVD duties. The U.S. National Association of Home Builders, in contrast, continues to underline that U.S. timber production is insufficient to cover builders’ needs, making them dependent on imports and that those imports are already too expensive.

• April 28, 2025 - Mark Carney is elected as Prime Minister after taking over for Justin Trudeau as Liberal Party leader in March. Carney aims to take a strong stance against perceived attacks on Canada by President Trump.

• May 8, 2025 - Continuing to frame lumber as a federal rather than a provincial issue, BC Premier Eby argues softwood lumber can be a stepping stone providing “momentum for a larger agreement” between the U.S. and Canada.

Implications of the U.S.-Canada Softwood Lumber Dispute

Although the BC provincial government continues to advocate for federal support in resolving the softwood lumber dispute, the Canadian government appears only intermittently focused on softwood lumber. Canadian PM Carney did not comment on lumber tariffs or duties when asked about trade following his meeting with Donald Trump on May 6, 2025, nor were these mentioned by either leader in their joint press conference. This raises questions about whether the Canadian government will be willing to expend its political capital on negotiating an end to lumber tariffs when other tariffs, including those on automobiles, automobile parts, steel and aluminum – all of which were mentioned at the joint press conference – continue to cause economic pain. Similarly, absent any new developments, the U.S. administration is also unlikely to actively engage in resolution before receiving the results from the Section 232 investigation, which are due by November 2025. 

From an industry perspective, Canadian sectors are united in their opposition to the U.S. tariffs, with leaders in construction and forestry consistently calling for resolution. Private sector positions are more contentious on the American side, with clear divides between the forestry sector, which sees the tariffs as an opportunity to scale up domestic production and increase market share, and the construction industry, which underlines negative logistical and cost implications arising from the tariffs. Given that economic engagement from both countries is considered critical for resolving the dispute, this bodes poorly for resolution in the coming months.