For decades now, softwood lumber has been a sticking point between the United States and Canada, with multiple rounds of litigation and trade orders. A long-standing dispute stems from the assertion by American producers that Canadian lumber is unfairly subsidized by provincial governments through low “stumpage” fees (payments made by timber harvesters to landowners, private or government, for the right to cut and remove standing timber). Meanwhile, according to Natural Resources Canada, about 94% of Canada’s forest land is publicly owned and managed by provincial, territorial and federal governments.
Canada has consistently denied these claims, arguing that its forest management systems are market-based. However, the U.S. Department of Commerce (Commerce) has taken a different view, publishing a countervailing duty (CVD) order in January 2018. In recent weeks, Commerce released the preliminary results of its seventh administrative review, focusing on the period from January 1, 2024, through December 31, 2024. According to Commerce officials, countervailable subsidies were provided to Canadian producers and exporters of softwood lumber.
To reach these findings, Commerce examined the operations of two “mandatory respondents.” In their investigation, Commerce found that Resolute FP Canada Inc. and West Fraser Mills Ltd. received financial contributions from Canadian authorities, calculating preliminary subsidy rates of 11.70% ad valorem and 15.93% ad valorem, respectively. Non-selected companies were calculated at 14.17% ad valorem. The “non-selected” rate applies to 215 other Canadian companies that were part of the review but not individually examined, officials said. Commerce also rescinded the review for 56 companies that were found to have had no reviewable shipments of lumber to the U.S. during the 2024 period examined.
The release of these results was delayed by federal administrative hurdles. Originally, the deadline was set for early 2026, but a federal government shutdown and a subsequent backlog of electronic filings led Commerce to postpone all deadlines by a total of 68 days.
Now that the preliminary results are public, several procedural steps remain, including disclosure and comments. Commerce will disclose its specific calculations to interested parties within five days. Parties can then submit case briefs and rebuttal briefs to argue for or against the findings.
If requested by interested parties within 21 days of the notice, Commerce will also hold hearings to discuss the issues raised in the written briefs.
Absent a deadline extension, Commerce intends to issue the final results of the review within 120 days of the publication of the preliminary findings.
The immediate impact of the recent findings is primarily administrative, as they are preliminary and subject to change. However, once the results are finalized, they are expected to have direct economic impacts. Commerce officials intend to instruct U.S. Customs and Border Protection (CBP) to collect cash deposits based on the new rates for all shipments of Canadian softwood lumber entered into the U.S. on or after the date the final results are published.
When the U.S. imposes higher duty rates on Canadian lumber, the cost for Canadian producers to bring their products into the American market increases. Historically, these added costs are often passed down through the supply chain. The final results, expected later this year, will provide the definitive “cash deposit” rates for the next cycle.