NAFTA Panel Upholds 35.16% Duty on Canadian Softwood Lumber

Duty Deposit Maintained for Canadian Lumber

On October 5, 2026, a binational NAFTA panel affirmed the United States Commerce Department's finding that Canadian softwood lumber receives subsidies. This decision, which concludes a review initiated nearly nine years ago in 2017, means that Canadian producers exporting softwood lumber to the US will continue to face a combined duty deposit of 35.16%.

The panel's ruling accepted the Commerce Department's second response to its directives without further amendments, according to a notice from the NAFTA Secretariat’s US Section.

A Lengthy Review Process

The review process significantly exceeded the 315-day timeframe outlined in the panel's rules. The panel had previously sent parts of the 2017 subsidy case back to the Commerce Department for reconsideration in 2024 and again in March 2026. Following these directives, Commerce issued a fresh determination in December 2024.

While the panel accepted some aspects of that revised answer in March 2026, it required further adjustments before fully upholding the Commerce Department's position this week. The current 35.16% duty deposit applies under the sixth annual review, although Commerce had proposed reducing it to 25.18% in June 2026. The British Columbia government anticipates the final results of the seventh review this month.

Basis of Subsidy Finding and Related Trade Disputes

The primary source of the subsidies identified by the Commerce Department stems from Crown stumpage. This refers to the price provinces, particularly Alberta and British Columbia, charge for harvesting standing timber on public land.

Canada's federal government, alongside major producers such as Canfor, Tolko, and West Fraser, initiated the review in November 2017 to challenge the US findings.

In a separate but related development, another NAFTA panel, which is reviewing the 2017 finding that Canadian lumber was sold below fair value, also sent parts of the Commerce Department's response back for a second time in February 2026.

Implications for Global Timber Sourcing

The sustained 35.16% duty on Canadian softwood lumber entering the US market could influence global supply chains and pricing for this essential building material. While this decision directly impacts North American trade, shifts in major supply and demand dynamics can create ripple effects across international markets.

Procurement teams and specifiers in Asia should monitor global softwood lumber price trends closely, as any redirection of Canadian supply or increased costs in a key market like the US could indirectly affect the availability and pricing of timber from other sources.

This may necessitate re-evaluating sourcing strategies to maintain project budgets for construction and interior fit-outs in the region.