softwood lumber duties upheld as NAFTA panel sides with U.S.

A binational NAFTA panel has upheld softwood lumber duties imposed on Canadian timber by the United States, closing out a trade fight that began nearly nine years ago. According to a notice in the Federal Register, the panel issued its decision on October 5, affirming the Department of Commerce's second redetermination on remand in full. The ruling leaves the original countervailing-duty finding against Canadian softwood lumber intact, and it ends the review process for that finding.

A dispute that outlasted its own rules

The challenge began in November 2017, when Canada, several provincial governments, and major producers including Canfor, Tolko, and West Fraser asked a NAFTA panel to review the Commerce Department's subsidy finding. At issue was the way Commerce judged provincial Crown stumpage systems, the fees companies pay to harvest timber from public forests in provinces such as Alberta and British Columbia. The three governments that signed the agreement once set panel rules designed to produce decisions within roughly 315 days. Instead, the first decision arrived more than six years later, in May 2024, sending Commerce back to explain parts of its methodology. Commerce issued a fresh determination late that year; the panel accepted part of that answer in March 2025 and returned the rest for more work. The latest ruling affirms Commerce's second attempt in full, the third decision in this particular review.

The softwood lumber duties themselves are already being collected at the border, so the ruling changes little for shippers in the short term. Most companies covered by the sixth administrative review remain subject to a combined anti-dumping and countervailing cash-deposit rate of 35.16 percent, according to trade reporting on the case. Commerce has floated a post-preliminary rate of 25.18 percent for non-selected respondents in a later review, but that rate is not yet in effect. Covered softwood lumber is also subject to a separate 10 percent tariff under Section 232. The result is a stack of levies on every truckload of Canadian lumber entering the United States.

Why mills, builders, and buyers should care

The American industry that pushed for the duties welcomed the ruling. The U.S. Lumber Coalition said in an October 7 statement that the panel had confirmed Canadian producers receive unfair subsidies and that offsetting duties are appropriate under domestic trade law. The group argues that Canada has built chronic excess capacity in its softwood sector: as of last year, Canadian producers could manufacture 3.6 times as much lumber as the domestic market could absorb, the coalition said, with the surplus aimed largely at buyers south of the border. Canadian officials and producers have long disputed that reading, pointing to market pricing in their timber systems and warning that duties punish northern mills and the communities around them.

The fight reaches beyond sawmills, because lumber is a core input in homebuilding. Duties raise the cost of framing lumber for American builders, and builders tend to pass those costs along in the price of new homes. That keeps the softwood dispute connected to housing affordability, one of the issues that hits younger buyers and renters hardest. Construction trade groups have complained for years that the combined duties act as a tax on new housing supply; domestic producers counter that a level playing field protects American mill jobs. Both claims can be true at once, which is why the dispute keeps cycling through negotiations even after rulings go final.

The ruling settles this review, but it does not end the wider softwood wars. Administrative reviews continue to reset duty rates year by year, and both countries can still challenge newer determinations through the dispute channels in the current North American trade pact. Talks toward a longer-term managed-trade deal have started and stalled for decades, and neither side shows much appetite for concessions now. For Canadian exporters, the near-term reality is steady duties and continued paperwork; for American producers, it is confirmation that the enforcement strategy of the past decade has worked. The lumber keeps crossing the border either way, at a higher price.