American negotiators are refusing to lower softwood lumber duties that now sit near 45 percent, sources say, turning Canada’s oldest trade grievance into the loudest political fight of the final hours before Wednesday’s tariff deadline.
VANCOUVER, August 18, 2026 As Canadian and American negotiators race toward Wednesday’s 50 percent tariff deadline, one file has emerged as both a sticking point at the table and a lightning rod at home: softwood lumber. Two sources with knowledge of the talks told Global News that the Americans are not interested in reducing softwood lumber tariffs and duties, which currently sit close to 45 percent, and one source said Canada has had to fight simply to get lumber onto the negotiating agenda at all.
That refusal has collided with escalating Canadian demands that any deal deliver relief for a forestry sector already deep in crisis. Conservative Leader Pierre Poilievre threw down the gauntlet at a news conference on Sunday. “It is unacceptable for there to be U.S. tariffs on Canadian lumber,” he said. “It’s time for Mark Carney to keep his promise that he would negotiate a win and get the tariffs off Canadian softwood lumber. No more concessions while getting nothing in return.”
British Columbia Premier David Eby, whose province anchors the Canadian industry, was blunter still. “We face higher tariffs than Russia,” he said on Friday. “The U.S., for some inexplicable reason, is putting forest families out of work here in order to prioritize lumber imports from Europe and Russia.”
The arithmetic behind those complaints is stark. Canadian softwood entering the United States now carries a stacked burden of anti-dumping and countervailing duties combined with Section 232 national security tariffs on wood products, a combination that industry participants and provincial officials peg at roughly 45 percent. Wood products were excluded from the new Section 338 tariffs taking effect Wednesday, according to trade publication Wood Central, but that exclusion offers cold comfort: lumber was left out precisely because it is already taxed under other authorities.
The oldest fight in the relationship
Softwood lumber is the longest running trade dispute between the two countries, with the modern conflict dating to 1982. Five separate rounds of litigation, negotiation and managed trade agreements have come and gone since, each following a familiar cycle: the U.S. lumber lobby petitions for duties, alleging that Canadian provinces subsidize their industry through low stumpage fees on public timber; Washington imposes anti-dumping and countervailing duties; Canada wins significant victories before trade tribunals and under trade agreement dispute panels; and eventually the two sides negotiate a truce that expires and restarts the cycle.
The current round began when the 2006 Softwood Lumber Agreement lapsed in 2015 and the U.S. Lumber Coalition petitioned for new duties the following year. Duty rates have ratcheted upward through successive administrative reviews by the U.S. Department of Commerce, and the Section 232 tariff on wood products added a new layer in 2025 that no previous round of the dispute ever included. The seventh administrative review of the anti-dumping and countervailing duty orders is expected to produce final results between August and October of this year, according to analysis published by the Congressional Research Service, meaning rates could shift again within weeks regardless of what the negotiators agree.
Canadian officials note the bitter irony that decades of tribunal victories have never durably lowered the duties. Deposits collected from Canadian producers during past rounds ran into the billions of dollars, most of which was eventually returned under the 2006 settlement, and the industry has warned for years that litigation wins without negotiated settlements simply finance the next round of American petitions.
An industry already on its knees
The duties are not an abstraction in British Columbia’s interior, northern Alberta, or the mill towns of Quebec and New Brunswick. Canadian producers have curtailed production, idled shifts and permanently closed mills through 2025 and 2026 as the duty burden compounded weak lumber prices and shrinking allowable cuts. Several of the largest Canadian companies have shifted capital investment to sawmills in the American South, a rational response to the tariff wall that nonetheless exports jobs along with the capital.
The federal government has tried to cushion the blow. Prime Minister Mark Carney announced a package of measures in November 2025 to protect and transform the steel and lumber industries, and Natural Resources Minister Tim Hodgson has said money earmarked for forest products will help the industry pivot away from reliance on the United States, as reported by Global News. Industry groups have welcomed the support while noting that no domestic program can replace access to a market that has historically taken the overwhelming majority of Canadian lumber exports.
The American housing market pays its own price. U.S. homebuilders have long argued that lumber duties function as a tax on housing affordability, adding thousands of dollars to the cost of a new single family home. The National Association of Home Builders has repeatedly urged Washington to settle the dispute, an argument that has gained little traction against the protectionist current of the past two years. Eby’s charge that the United States is prioritizing European and Russian lumber reflects a real shift: import statistics have shown European producers capturing American market share as Canadian volumes retreat behind the duty wall.
How the duty stack works
Understanding why the lumber number is so hard to move requires understanding how it is built. The roughly 45 percent burden is not one tariff but a stack of three distinct instruments, each with its own legal machinery and its own politics.
The first layer is countervailing duties, imposed on the theory that provincial stumpage systems, the fees provinces charge companies to harvest timber on Crown land, constitute a subsidy because they allegedly price timber below market rates. Canada has always rejected the premise, noting that its forest tenure system differs structurally from American private timberland rather than subsidizing anyone, and dispute panels have repeatedly found flaws in the American subsidy calculations. The second layer is anti-dumping duties, based on findings that Canadian producers sell into the United States below fair value. These two layers are recalculated in annual administrative reviews, which is why company specific rates lurch up and down from year to year in ways that have little to do with market conditions.
The third layer arrived in 2025, when Washington added Section 232 national security tariffs on wood products, a designation that folded lumber into the same framework as steel and aluminum. That layer transformed the dispute. The anti-dumping and countervailing duties at least operate inside a rules based process with evidence, reviews and appeal rights. The national security tariff is a policy choice, adjustable by proclamation, and it is the layer Canadian negotiators believe should be easiest to trade away, which makes the reported American refusal to discuss lumber relief all the more discouraging to the sector.
The stacking also produces the comparison that so incenses British Columbia. Because few other lumber exporting nations face the anti-dumping and countervailing layers, European producers ship into the American market at materially lower total duty rates than Canadian mills, and Eby’s complaint that Canada faces higher barriers than Russia refers to precisely this arithmetic. The result is a lumber market in which the closest, most integrated supplier is the most heavily taxed, an outcome that no economic logic recommends but that four decades of trade remedy litigation has entrenched.
The view from the mill towns
Statistics soften what mill closures actually do. When a sawmill shuts in a place like Mackenzie, Quesnel or Chetwynd, the town loses its largest employer, its tax base and often its reason for existing. British Columbia’s interior has lived this sequence repeatedly through the current round of the dispute, as duty burdens combined with beetle damaged timber supply and provincial harvest reductions to make marginal mills unviable. Each closure ripples through logging contractors, truckers, equipment dealers and the small businesses on the main street that depended on mill wages.
Industry economists estimate that the sector has shed thousands of direct jobs in British Columbia alone over the course of the current dispute round, with more losses in Alberta, Ontario, Quebec and Atlantic Canada. The jobs that remain are increasingly concentrated in larger, more efficient mills whose owners can spread duty deposits across bigger volumes, an industrial consolidation that the duty regime accelerates. Smaller independent operators, without the balance sheet to finance years of duty deposits while awaiting review results and refunds, sell out or shut down.
The duty deposit mechanism deserves particular attention because it functions as a silent credit squeeze. Canadian exporters must post cash deposits at the estimated duty rate on every shipment, money that sits with U.S. customs for years while administrative reviews grind toward final rates. When final rates come in lower than deposit rates, the difference is eventually refunded with interest, but the working capital cost in the interim is real and heavy. Companies describe it as lending their own money to the U.S. government involuntarily, at a scale that has historically reached billions of dollars across the industry.
A political trap for Ottawa
The lumber file now presents Prime Minister Carney with a nearly impossible political equation. Sources told Global News that any deal the Trump administration is willing to sign will retain some form of tariffs on steel, aluminum, autos and lumber. If that holds, Carney can reach an agreement that averts Wednesday’s 50 percent tariffs only by accepting continued duties on softwood, handing Poilievre a ready made betrayal narrative built on the prime minister’s own promise to negotiate a win for the sector.
Poilievre’s Sunday intervention made the trap explicit, and the Conservative critic for Canada-U.S. relations, Shuv Majumdar, reinforced the frame in a statement Monday, saying the party hopes the government secures “an agreement that lifts the tariffs and duties now weighing on our steel, aluminum, lumber and automotive industries.”
Public opinion gives Ottawa little cover for concessions. An Abacus Data poll released Monday found just 18 percent of Canadians favour offering concessions to get tariffs removed, while 36 percent would retaliate with counter tariffs and 30 percent would keep negotiating without them. Seventy percent expect the new tariffs to damage their local economies, a sentiment nowhere sharper than in forestry dependent communities where the damage is not prospective but present.
Carney, for his part, has kept his language careful. He described the negotiations Monday as “very delicate and intense” and confirmed he expects to speak with President Donald Trump before the deadline. Trade Minister Dominic LeBlanc, after meeting U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick in Washington on Monday, said only that “we’re going to continue working. Our job is not yet done.”
Why Washington will not move
The American refusal to bend on lumber has structural roots that predate the current administration. The U.S. Lumber Coalition is one of the most effective trade remedy petitioners in American history, with mills concentrated in politically important states across the South and Pacific Northwest. Unlike the Section 338 tariffs, which the president created by proclamation and could suspend the same way, the anti-dumping and countervailing duties on lumber flow from quasi-judicial Commerce Department proceedings that an executive agreement cannot simply erase. Any durable settlement requires either a negotiated suspension agreement of the kind reached in 2006, which needs the American industry’s consent, or sustained political will to override that industry, which no recent administration has mustered.
That is why, as one source told Global News, Canada had to fight even to put softwood on the table in these talks. From Washington’s perspective, lumber is settled business: the duties are in place, the domestic industry is content, and the administrative review machinery grinds forward on its own schedule. Reopening the file offers the administration nothing it values in a negotiation whose leverage already runs in its favour.
There have been small signs of movement in the administrative process itself. A preliminary decision this summer pointed toward a modest reduction in combined duty rates for some producers, developments reported by CBC News and Wood Central, but analysts cautioned that uncertainty remains and that preliminary rates frequently move before finalization. Even the most optimistic reading would leave combined rates at levels the Canadian industry considers ruinous.
The diversification gamble
If the American market cannot be fixed, Ottawa’s fallback is to need it less, and the outlines of that strategy are already visible. The federal package announced in November 2025 paired support for affected workers and communities with funding intended to shift the industry toward higher value wood products and new markets. Mass timber construction, engineered wood products and prefabricated building systems all command better margins than commodity dimensional lumber and face different, often lower, trade barriers. Provincial governments have layered on their own programs, and the industry’s larger players have invested in value added capacity even as they curtail commodity production.
Export diversification is the harder half of the strategy. Japan and China have historically been the industry’s most significant non-American markets, and shipments to Asia rise whenever American duties bite, but offshore markets absorb nothing close to the volumes the United States takes, and ocean freight economics favour coastal mills over the interior operations that need relief most. The government’s broader push to expand non-U.S. trade, accelerated by this year’s agreements with China on agricultural products and electric vehicles, gives lumber a policy tailwind, but no realistic scenario replaces the American customer within this decade.
That reality is what keeps the sector tethered to the negotiating table in Washington even after four decades of disappointment. It is also what gives the current talks their peculiar asymmetry: the United States can live indefinitely with the status quo, while every year of it forces more Canadian capacity to close or migrate south. Several of Canada’s largest forest products companies now operate more sawmill capacity in the American South than in British Columbia, a migration of capital and eventually of expertise that the duty wall has done more to cause than any market force.
What it means for the sector and its customers
For Canadian producers, the immediate planning assumption must be that duties near current levels persist into 2027. That argues for continuing the strategies already underway: maximizing value added production that carries better margins under the duty burden, developing offshore markets in Asia and Europe, pressing Ottawa and the provinces for fibre access and stumpage flexibility, and maintaining meticulous documentation for the administrative reviews that will determine company specific rates.
For American buyers, builders and dealers, the practical advice is to lock in supply relationships early and watch the administrative review calendar as closely as the negotiation headlines. Final results in the seventh review, expected between August and October, could shift landed costs for specific Canadian suppliers in either direction, and any surprise framework agreement between Ottawa and Washington could change the picture faster still.
For the towns whose economies rise and fall with the mills, the stakes are simpler. Every month the duties persist, the arithmetic of curtailment tightens. British Columbia has lost thousands of forestry jobs over the course of the dispute’s current round, and each closure is effectively permanent, since shuttered mills in high cost regions rarely reopen. Eby’s fury and Poilievre’s ultimatum, whatever their political packaging, reflect that grinding reality.
There is also a scenario the industry discusses quietly: that lumber becomes the sacrifice that saves the rest of the deal. If negotiators reach a framework this week that suspends the Section 338 tariffs, reduces auto duties and restores calm across most sectors while leaving lumber duties untouched, the sector will have subsidized the settlement with its continued exclusion. Industry associations have warned Ottawa against exactly that outcome for months, and Poilievre’s pre-emptive framing of lumber as the test of the deal’s adequacy ensures the government will pay a political price if it happens. Yet the alternative, holding the entire economy hostage to the one file Washington refuses to open, is a trade no government facing Wednesday’s deadline could responsibly make.
The honest assessment, shared privately by officials on both sides of the table over many years, is that softwood peace has only ever come through managed trade: quotas, export charges and negotiated market shares of the kind the 2006 agreement embodied. Free trade in lumber between the two countries has never survived contact with the American industry’s petition machinery. Any durable settlement to emerge from this crisis, this year or after, will almost certainly look like another managed arrangement, and Canadian producers who plan for that outcome, rather than for the restoration of unrestricted access, will be planning for the world as it is.
The softwood war is older than most of the people negotiating it, and it has outlasted every deadline ever set for its resolution. Whether Wednesday’s tariff cliff produces a grand bargain or another collapse, the smart money in the lumber trade is on the dispute doing what it has always done: surviving. The difference this time is that a Canadian industry with less margin for error than at any point in the dispute’s four decades may not survive with it, and both governments know it.