Canada’s softwood producers brace for a summer duty ruling as a fresh British Columbia mill closure lays bare the human cost of a tariff wall that has climbed past 45 per cent, even as CUSMA drifts and Ottawa’s former chief negotiator warns relief may not arrive before the U.S. midterms.
PRINCE GEORGE, B.C., July 17, 2026. The latest casualty of Canada’s grinding trade fight with the United States does not carry a tariff code, but it carries a body count in jobs. On Tuesday, Canfor Corp. told 300 workers at its Northwood pulp mill in Prince George that their operation will shut for good by the end of the year, another light going dark in a British Columbia forest sector that has spent three years absorbing the heaviest import duties Washington has ever levied against Canadian wood.
The company was careful to say the Northwood decision was driven by a global glut of pulp, weak prices and a chronic shortage of affordable fibre rather than by the U.S. tariffs that dominate every conversation in the province’s mill towns. Yet the timing landed like a hammer. It arrived in the same week that trade lawyers in Ottawa and Washington began counting down to a U.S. Commerce Department ruling, expected as early as late August, that will set the anti-dumping and countervailing duty rates most Canadian softwood exporters pay for years to come. It arrived while the Canada, United States and Mexico Agreement, the pact that shields most cross-border commerce, sits in a strange half-life after its members failed to agree on renewal at the start of the month. And it arrived just weeks after Canada’s former chief trade negotiator told investors not to expect a tariff settlement with the Trump administration before American voters go to the polls in November.
For the country’s importers, exporters and the tens of thousands of families whose livelihoods ride on the forest sector, the message of the past 48 hours is bleak and familiar. The lumber file remains stuck, the duties remain stacked, and the political calendar that governs any resolution belongs to Washington.
A tariff wall built in two layers
To understand why a pulp mill closure in the northern Interior reverberates through the entire softwood trade, it helps to see how high the American wall has become and how it was built.
Canadian softwood lumber entering the United States now faces two separate American measures piled one atop the other. The first is the long-running anti-dumping and countervailing duty regime, a dispute that stretches back to the early 1980s and that intensified sharply after 2017. Those combined duties currently sit at roughly 35.16 per cent for most producers, according to figures reported by The Globe and Mail. The second is newer and blunter: a 10 per cent tariff imposed in October 2025 under Section 232 of the Trade Expansion Act of 1962, the national security provision the White House has used to justify levies on steel, aluminum and, now, timber and lumber. Because the Section 232 duty applies even to shipments that meet the free trade agreement’s rules of origin, it stacks directly on top of the trade-case duties.
The result is a combined burden of about 45.16 per cent on most Canadian softwood crossing the border. Derek Nighbor, president and chief executive of the Forest Products Association of Canada, has put the number plainly in appearances before Parliament, telling committees that the industry faces duties and Section 232 tariffs “in the 45 per cent range” on nearly $8 billion in annual softwood exports to the United States.
The cumulative bill is staggering. Canadian producers have paid more than US$8 billion in U.S. duties since 2017, The Globe and Mail reported, money held in deposit accounts in Washington while the legal machinery grinds on. The U.S. Lumber Coalition, the American industry group that has driven the trade cases for decades, offers a slightly different accounting but a similar order of magnitude, estimating that Canadian companies paid close to US$7 billion in duties through the 2024 review period and are on the hook for an additional US$175 million and counting for that year’s shipments.
Those deposits sit at the center of the current suspense. The Commerce Department runs an administrative review of the duty orders roughly once a year, recalculating the rates based on a fresh period of trade data. On April 9, 2026, it released the preliminary results of its seventh review, covering lumber imported during calendar year 2024. The preliminary numbers pointed downward: an anti-dumping rate of 10.66 per cent, down from 20.56 per cent, and a countervailing rate of 14.17 per cent, roughly flat at the prior 14.63 per cent. Together they would drop the combined trade-case duty from 35.16 per cent to 24.83 per cent.
That would be meaningful relief, but it comes with two large caveats that Canadian mills have learned not to ignore. First, a preliminary rate is not a final one, and Commerce can revise it before issuing a final determination. That final ruling is expected in late August at the earliest, or as late as October if the review is fully extended, with new rates intended to take effect in late summer or early autumn. Second, even a 24.83 per cent trade-case duty does nothing about the 10 per cent Section 232 tariff sitting on top of it. Should the preliminary numbers hold, the all-in rate for most producers would ease to roughly 34.83 per cent, still punishing by any historical measure and still enough to keep marginal mills underwater.
The math explains the paradox facing the sector this summer. A duty cut is coming, and it may arrive within weeks, yet no one in the industry is celebrating. A wall that falls from 45 per cent to 35 per cent is still a wall.
CUSMA slips into limbo
If the trade-case duties are the technical heart of the softwood fight, the broader Canada, United States and Mexico Agreement is its diplomatic frame, and that frame cracked at the beginning of July.
July 1 was the deadline for the three governments to complete a required joint review of the pact and decide whether to extend it toward 2042 or let it slide into a series of annual reviews that would run until its scheduled expiry in 2036. The fifth session of the Free Trade Commission that governs the deal convened that day, seating Canada’s trade minister, Dominic LeBlanc, across from U.S. Trade Representative Jamieson Greer and Mexico’s economy secretary, Marcelo Ebrard. Under the treaty’s Section 34.7, the partners could have chosen the long extension. They did not. No renewal was agreed, and the agreement now shifts toward annual reviews, a status that trade analysts have begun describing as a “zombie” state, technically alive but capable of being prolonged in uncertainty for as long as Washington finds it useful.
For the lumber industry, the review changed nothing, and that was precisely the problem. LeBlanc used the meeting to press the American side to roll back what Ottawa calls sectoral tariffs, naming steel, aluminum, autos and softwood lumber as the files Canada wants resolved. He argued that Canada negotiates from a position of strength, noting that the agreement remains in force until 2036 and can be renewed at any time. Yet the Section 232 lumber tariff sits entirely outside the CUSMA framework and requires its own settlement, which means the joint review, whatever its outcome, could not touch the newest and most aggressive layer of the softwood wall.
The stakes of that impasse are enormous. Cross-border trade in goods and services moved roughly $3.5 billion across the border every day in 2025. A group of Canadian trade experts, writing days after the review, urged Ottawa to hold a “firm but constructive” posture and warned that a rushed deal resting on signatures alone, without enforceable terms and a functioning dispute-resolution mechanism, would not guarantee stability.
The person who spent years inside those negotiating rooms is even more sober about the timeline. Steve Verheul, who led Canada’s team through the renegotiation of the North American pact during President Donald Trump’s first term and now works as a principal at the public affairs firm GT and Co., told a business audience convened by the Bank of Montreal that he does not expect a tariff deal before the U.S. midterm elections. There could be a window, he allowed, when Trump and his administration are hunting for a political win ahead of the November vote, but he cautioned that discussions will likely stretch beyond the midterms and possibly into next year. For an industry measuring survival in quarters, a horizon measured in elections is cold comfort.
The view from British Columbia
Nowhere is the pain more concentrated than in British Columbia, which produces more than 40 per cent of Canada’s lumber exports and whose forest sector supports roughly 95,000 jobs. Premier David Eby has spent the past year trying to force the softwood dispute onto the national agenda, arguing that the industry contributes more to Canada’s gross domestic product than auto parts and steel and provides more direct employment across the country than either sector.
His rhetoric has grown sharper as the duties have climbed. When the Section 232 tariff took effect last autumn, pushing the combined burden toward the mid 40s, Eby told a news conference that Canadian wood now carried a higher tariff rate into the United States than Russian wood did. “I want to let that sink in,” he said, calling it an existential threat and warning that many forest companies were on a “razor’s edge of survival.” At a forestry conference in Vancouver this spring he returned to the same theme, noting that the United States lacks the domestic capacity to meet its own demand and has turned to imports from Europe “and from Russia of all places” to fill the gap, driving up the cost of homebuilding for American families.
Eby’s answer has been diversification. The premier led a trade mission to China in late June and early July, courting buyers for the province’s timber, and has set a target of doubling British Columbia’s exports to markets beyond the United States within a decade. Earlier in the year he traveled to India on a similar mission. The strategy is a long game, and it will not save the mills closing this year, but it reflects a hard conclusion in Victoria that the American market can no longer be treated as a reliable anchor.
The Canfor closure gave that conclusion a human face this week. Ravi Parmar, British Columbia’s minister of forests, called the loss of the Northwood mill “heartbreaking for the workers, their families, contractors and the entire Prince George community and region,” and said provincial staff would deploy support to affected employees. The union representing the mill’s workers said the news left its members “reeling.” The mill’s shutdown will remove about 300,000 tonnes of northern bleached softwood kraft pulp from Canfor’s annual output, a reminder that the tariff crisis in lumber and the structural crisis in pulp are unfolding in the same communities, drawing on the same shrinking supply of logs, and hitting the same workers.
That overlap points to an uncomfortable truth that Ottawa’s own analysts have acknowledged. A federal report earlier this year concluded that much of the forestry sector’s distress stems from homegrown problems, including a tightening fibre supply after years of wildfire and pest damage and a permitting system that critics say has grown slower and more expensive, rather than from Trump’s tariffs alone. Opposition figures in British Columbia have seized on that point. Ward Stamer, the BC Conservative critic for forests, told the spring forestry conference that the province is “just one phone call away from shutting another mill down,” arguing that the combination of tariffs and a domestic regulatory burden that makes British Columbia among the most expensive places in North America to operate has become unsustainable. The tariffs, in other words, are the accelerant on a fire that was already burning.
Washington digs in
On the American side, the industry group behind the trade cases shows no sign of easing its pressure, and its argument has hardened into a demand that Canada shrink its own industry.
Zoltan van Heyningen, executive director of the U.S. Lumber Coalition, said the preliminary results of the seventh review confirmed “yet again, that Canada continues to trade unfairly in softwood lumber,” and argued that the “time has come for Canada to stop subsidizing its lumber industry and instead reduce its massive excess lumber production to meet market realities.” The coalition’s central statistic is that Canada consumes an estimated 7 billion board feet of lumber a year but has the capacity to produce roughly 27 billion, a surplus the group says is dumped into the United States at the expense of American mills. The coalition has also alleged that new Canadian government support programs amount to more than C$2 billion in fresh subsidies, framing Ottawa’s aid to its beleaguered sector as further evidence of the unfair trade it wants Commerce to punish.
That framing collides directly with how Ottawa describes the same money. In November 2025, Prime Minister Mark Carney’s government announced roughly $1 billion in support for the forest sector, much of it in loans, alongside new limits on steel imports. In June, the federal government layered on an additional $400 million, split between a $300 million Regional Tariff Response Initiative aimed at helping small and medium-sized firms diversify and modernize, and a new $100 million Regional Development Fund, with Natural Resources Minister Tim Hodgson making the announcement in Victoria. Nighbor, the Forest Products Association chief, called it “the most robust federal government response we have seen in years to the core issues holding our industry back,” while pressing for faster rollout and a “Team Canada” approach.
Ottawa has also grown more willing to wield trade tools of its own. In April, the finance minister asked the Canadian International Trade Tribunal to open a safeguard inquiry into imports of certain wood products, including solid and engineered wood cabinets and vanities, hardwood flooring, and engineered wood storage furniture, after Canadian manufacturers argued they were being undercut by a surge of cheap global imports. The tribunal is scheduled to report its recommendation by January 15, 2027, and could propose a safeguard surtax or import quotas. That inquiry sits alongside the tariff-rate quotas and 25 per cent surtax on steel derivative products that Ottawa imposed at the end of 2025, and the Buy Canadian procurement rules meant to steer government contracts toward domestic suppliers. Taken together, they mark a Canadian turn toward the same protectionist instruments Ottawa spent decades arguing against, a defensive crouch in response to Washington’s own turn.
What it means for importers and exporters
For the American companies that buy Canadian lumber, chiefly homebuilders and the retailers who supply them, the coming Commerce ruling is a rare piece of potential good news in an otherwise punishing environment. The National Association of Home Builders has flagged the expected duty reduction as a modest tailwind for housing affordability, since softwood lumber is a core input in residential construction and the stacked duties have added cost to every framed home. A drop in the trade-case duty from 35.16 per cent to 24.83 per cent, if it survives to the final determination, would ease that pressure at the margin. But the persistence of the 10 per cent Section 232 tariff means American buyers should not expect prices to snap back. The wall is coming down a few courses of brick, not being demolished.
For Canadian exporters, the calculus is harder. The all-in duty, even at a reduced 34.83 per cent, will keep the least efficient mills in the red and will continue to reward diversification away from the United States. Producers with access to Asian and domestic markets, or with capital to invest in higher-value engineered wood and mass-timber products, are better positioned to ride out the storm than commodity lumber operations dependent on American demand. The broader trade data underscore how much the market has already shifted. Canada still supplies about 75 per cent of the softwood lumber the United States imports, a dependence that gives Ottawa some leverage, yet American softwood imports fell 28 per cent in the year to January as the stacked duties priced Canadian wood out and buyers sought alternatives, including the European and Russian supply Eby has derided. Every ton that leaves the cross-border trade is a ton Canadian mills must sell elsewhere or not at all.
For Canadian businesses more broadly, the softwood standoff is a case study in the new normal. Companies that import steel or wood inputs now navigate a thicket of surtaxes and quotas at their own border, even as their exports face tariffs at the American one. Firms bidding on public contracts must weigh Buy Canadian rules. Manufacturers weighing whether to support or oppose the wood-products safeguard inquiry find themselves on opposite sides of a domestic fight, with producers seeking protection and importers and retailers warning that new duties will simply raise costs for Canadian consumers. The predictability that a functioning CUSMA once promised has given way to a landscape where trade policy can shift with a customs notice or a presidential proclamation.
The road ahead
The next milestone is the Commerce Department’s final determination in the seventh review, the ruling that will convert the preliminary 24.83 per cent into a number producers can plan around. Whether it lands in late August or slips to October, it will not resolve the Section 232 layer, which remains a separate track with its own uncertain timeline and no obvious off-ramp inside the CUSMA process. Beyond that sits the political question Verheul framed so starkly: whether the Trump administration wants a deal badly enough, and soon enough, to trade tariff relief for whatever concessions it seeks, or whether the softwood file simply grinds on as it has for four decades, a permanent feature of the relationship rather than a problem to be solved.
For the workers at Northwood, and for the mill towns watching to see who is next, the abstractions of duty rates and review cycles resolve into a single question about whether their operation will still be running next year. Canfor’s insistence that the Northwood closure reflected pulp economics rather than tariffs is accurate, and it is also beside the point for a community that has watched its forest economy hollow out from every direction at once. The tariffs did not close this mill, but they have helped define the environment in which such closures now feel routine. Until the wall comes down further than a summer duty cut will bring it, and until CUSMA is either revived or replaced with something durable, Canada’s softwood sector will remain where it has been all year, in limbo, waiting on decisions made in Washington and measured against a calendar it does not control.