U.S. Resets Canadian Lumber Duties as Exporters Face Combined Rates of Nearly 25% Before Extra Tariffs

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Canada’s softwood lumber industry has received a reduction in U.S. trade duties, but the cost of selling lumber across the border remains substantial. The U.S. Department of Commerce has finalized new anti-dumping and countervailing duty rates, setting a combined rate of 24.75% for many Canadian exporters covered by its latest review. Once an additional 10% tariff is included, the total reaches 34.75% for those shipments.

The revised rates were announced on October 14, 2026, and took effect with their publication in the U.S. Federal Register on October 19. Although the reduction offers some relief compared with 2025, it does not resolve the longstanding trade dispute. Canadian sawmills, forestry workers and American homebuilders continue to face the consequences of tariffs that influence everything from production decisions to construction costs.

Washington Finalizes Another Round of Canadian Lumber Duties

The U.S. Department of Commerce has completed its seventh administrative review of the anti-dumping and countervailing duty orders on Canadian softwood lumber. The latest findings examine shipments imported between January 1 and December 31, 2024, while establishing updated duty-deposit requirements for covered products entering the United States. The review is part of an ongoing process through which Washington recalculates duties rather than negotiating a new trade arrangement with Canada.

The distinction matters because the final results affect both historical shipments and future business decisions. U.S. Customs and Border Protection collects estimated duty deposits when qualifying lumber enters the country, but the amounts ultimately assessed can change through subsequent reviews and legal proceedings. For Canadian mills negotiating contracts months in advance, those adjustments create financial uncertainty. A company might agree to supply lumber at one price, only to discover that its eventual duty obligations differ from its earlier estimates. Even when rates fall, the administrative process continues to complicate production planning, financing and long-term relationships with American customers.

The New 24.75% Rate Does Not Include an Additional U.S. Tariff

For Canadian producers covered by the latest review but not individually examined, Commerce established an anti-dumping duty rate of 10.64% and a countervailing duty rate of 14.11%. Together, those measures produce a combined rate of 24.75%. Anti-dumping duties address findings that imported products were sold below normal value, while countervailing duties are intended to offset government subsidies that U.S. authorities determine provide an unfair advantage to foreign producers.

However, those figures do not represent the entire trade burden. President Donald Trump introduced a separate 10% tariff on covered softwood lumber imports under Section 232 of the Trade Expansion Act, effective October 14, 2025. The measure followed a national-security investigation into imported timber and wood products. According to the BC Lumber Trade Council, combining that tariff with the newly calculated trade-remedy duties produces a total of 34.75% for affected exporters. These charges are collected through the U.S. import system, although their economic costs can be shared among importers, Canadian suppliers and customers through adjustments to prices and profit margins.

Canadian Lumber Companies Face Different Duty Rates

Not every Canadian lumber producer is subject to the same percentage. Under the finalized seventh review, Canfor Corporation received a 17% anti-dumping rate and a 14.11% countervailing rate applicable to its reviewed shipments, producing a combined 31.11%. Resolute’s combined rate stands at 25.55%, consisting of 13.13% in anti-dumping duties and 12.42% in countervailing duties. West Fraser Mills received a lower combined rate of 20.02%, made up of 4.71% and 15.31%, respectively. These figures exclude the separate Section 232 tariff.

The differences help explain why duty announcements can affect competing mills in very different ways. Two companies selling similar construction lumber to American distributors may face different import charges depending on their assigned rates. The frequently cited 24.75% rate applies to reviewed non-selected exporters, rather than automatically replacing every rate across the industry. Companies outside the latest review may continue using rates established through earlier proceedings. Consequently, businesses must examine their specific classification, export arrangements and applicable customs requirements instead of assuming that the headline percentage reflects their actual obligations.

Rates Have Fallen From 2025, but the Trade Barriers Remain Significant

The latest decision represents a meaningful reduction from the previous administrative review for many affected exporters. Following amendments in September 2025, the sixth review had established a combined anti-dumping and countervailing rate of 35.16% for its non-selected companies. That consisted of a 20.53% anti-dumping rate and a 14.63% countervailing rate. The seventh review’s corresponding 24.75% figure is substantially lower, providing some relief to exporters that had been operating under particularly high duty requirements.

Nevertheless, the additional Section 232 tariff means the new rates still leave substantial costs attached to cross-border shipments. The BC Lumber Trade Council has emphasized that a total burden of 34.75% remains difficult for producers to absorb. Ontario officials also responded to the October 14 announcement by reiterating their demand for the complete removal of U.S. lumber duties and tariffs. The reduction therefore offers limited reassurance about future trade conditions. Sawmills making investment decisions must consider not only current rates but also the possibility of further changes through annual reviews, court challenges and wider U.S. trade policy.

Why Canada and the United States Continue to Disagree Over Lumber

The softwood lumber dispute reflects fundamental disagreements about how Canadian timber is priced and whether government involvement provides producers with unfair advantages. Much of Canada’s commercially harvested timber comes from publicly owned forests, where provincial governments establish systems for charging companies to harvest trees. American lumber interests have long argued that some of these arrangements allow Canadian producers to obtain timber at artificially favourable prices, putting U.S. sawmills at a competitive disadvantage. Countervailing duty investigations also examine other government programs, including grants, tax measures and electricity-related arrangements.

Canadian governments and industry representatives dispute the American interpretation, maintaining that the country’s forestry systems operate under legitimate market conditions and that the duties are unjustified. The U.S. Lumber Coalition, representing American producers, continues to defend enforcement of the trade measures as necessary to protect domestic mills and workers. Canadian officials argue that the restrictions punish competitive producers and increase costs throughout North American supply chains. The competing positions help explain why successive reviews and legal challenges have not produced a lasting settlement, despite decades of commercial integration between the two countries.

Canada’s Forestry Industry Remains Heavily Dependent on American Buyers

The United States continues to be the most important destination for Canadian softwood lumber. Statistics Canada reported that Canadian producers manufactured approximately 47.9 million cubic metres of softwood lumber in 2024, with about 27.9 million cubic metres exported to the American market. That means more than 58% of the country’s softwood lumber production was shipped south of the border. British Columbia’s Interior region was especially important, accounting for roughly 32% of Canada’s softwood lumber exports to the United States.

Such extensive trade relationships cannot be redirected quickly. Canadian mills have developed transportation networks, production specifications and longstanding customer relationships around American demand. Lumber manufactured in British Columbia can move into U.S. building-material distribution networks that supply residential projects across multiple states. Finding alternative buyers in Europe or Asia may require different product specifications, shipping arrangements and additional marketing investments. Although diversification could reduce long-term dependence on the United States, the size and proximity of the American market make it difficult to replace. Consequently, even reduced U.S. duties remain a significant concern for Canadian exporters.

Canadian Sawmill Communities Are Already Feeling the Pressure

The effects of the lumber dispute extend well beyond corporate earnings. Natural Resources Canada reported that the country’s forest sector directly employed approximately 194,040 people in 2024, with many positions concentrated in rural communities where forestry is an important economic foundation. Sawmills support additional activity through logging contractors, trucking businesses, equipment maintenance providers and nearby pulp and paper operations. When production slows or a facility closes, the resulting disruption can reach businesses that never directly export lumber.

Industry conditions had already weakened before the latest duty revision. In its April 2026 Monetary Policy Report, the Bank of Canada stated that Canadian lumber exports in February were approximately 20% below their 2024 average, while employment had been declining alongside production. Federal figures released in November 2025 indicated that 22 mills had closed since 2022 and more than 50 had reduced operations, directly affecting over 5,600 workers. Tariffs are not the only factor: higher operating costs, timber availability and weak demand also contribute. For affected communities, however, the practical consequences remain similar, including reduced working hours, uncertainty about employment and difficult decisions about staying or relocating.

American Homebuilders Also Face Higher Lumber Costs

The United States has substantial domestic lumber production, but Canadian supplies remain important to its construction industry. According to the National Association of Home Builders, Canada accounts for roughly 85% of American softwood lumber imports. The organization has repeatedly warned that import duties raise construction costs and create additional difficulties for builders already dealing with expensive land, financing and labour. Canadian spruce-pine-fir lumber is widely used for framing, making stable access to competitively priced supplies important for residential construction.

The effects are not necessarily immediate or uniform. Importers may absorb some additional duties, negotiate lower prices with suppliers or pass a portion of their costs to lumberyards and builders. Market conditions also influence how much reaches the eventual homebuyer. In an April 2025 survey, American builders estimated that recent tariff actions across construction materials would have a typical cost effect of approximately US$10,900 per home, although that figure was not attributable to lumber alone. The dispute therefore creates competing priorities in Washington: protecting domestic sawmill employment while limiting expenses for companies building new homes. Neither objective is easily achieved through tariffs in isolation.

Legal Challenges and Trade Negotiations Have Yet to Deliver a Settlement

The latest administrative review arrives alongside continuing legal proceedings over earlier lumber decisions. On October 5, 2026, a binational NAFTA panel affirmed a previous U.S. Commerce Department remand determination concerning countervailing duties. A separate panel decision on October 8, under the United States-Mexico-Canada Agreement, partly upheld and partly remanded findings from an earlier administrative review. These developments demonstrate how different portions of the dispute can remain under examination for years, even as new duty calculations take effect.

Canada continues to advocate a negotiated solution that would provide greater certainty for exporters. Meanwhile, Commerce has already initiated its eighth administrative reviews, covering 2025 shipments, creating another opportunity for rates to change. The annual process leaves companies preparing for future adjustments without knowing whether a broader political agreement will eventually replace the existing system. For Canadian producers, successful litigation may provide relief in individual proceedings, but it does not necessarily remove the wider collection of trade restrictions. Until a comprehensive settlement is reached, exporters must continue operating in an environment where legal outcomes and government policy can have a substantial influence on commercial decisions.

Ottawa Is Expanding Support While Producers Look Beyond the U.S.

The Canadian federal government has introduced measures intended to help the forestry industry manage trade disruptions and develop alternative opportunities. By December 2025, Ottawa had announced more than $2.35 billion in forest-sector support measures, including an expansion of the Business Development Bank of Canada’s softwood lumber guarantee program, financing assistance for larger companies and funding for industrial transformation. The measures also target training, domestic procurement and the development of higher-value forest products, including engineered wood and mass-timber construction materials.

Support has continued through 2026. In September, the federal government highlighted a $30-million loan to Conifex Timber in Mackenzie, British Columbia, through its Large Enterprise Tariff Loan facility. Such financing can help companies manage liquidity pressures and restructure operations, but it cannot eliminate the economic challenges created by restricted market access. Building stronger domestic demand and expanding overseas exports may provide longer-term options, although neither can immediately replace established American customers. The latest U.S. duty reduction is therefore an improvement for many affected exporters, but the industry’s outlook remains closely tied to whether Canada and the United States can eventually establish a more predictable trading relationship.

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