A Quebec remanufacturer that spent seven years outside the U.S. countervailing duty order on softwood lumber has been put back inside it, and the case that did it is a warning about how long trade litigation can run and how little finality a favourable rate confers.
WASHINGTON, Aug. 7, 2026. The U.S. Department of Commerce has reinstated a Quebec softwood lumber producer into the countervailing duty order covering Canadian lumber, ending a legal fight that began in 2019 and travelled twice to the Court of Appeals for the Federal Circuit and through four separate remand redeterminations at the Court of International Trade.
The notice, published in the Federal Register on Aug. 6, 2026 at 91 FR 50793 under case number C-122-858, amends the final results of Commerce’s countervailing duty expedited review and reinstates Les Produits Forestiers D&G Ltee and its cross-owned company Les Produits Forestiers Portbec Ltee into the order. The companies are assigned a subsidy rate of 1.05 percent ad valorem, above the de minimis threshold. The notice was signed on July 30 by Christopher Abbott, Deputy Assistant Secretary for Policy and Negotiations, and placed on public inspection on Aug. 5. It is applicable as of Aug. 6.
The dollar figures are small. The precedent is not.
What happened
The countervailing duty order on certain softwood lumber products from Canada was published on Jan. 3, 2018. Shortly after, Commerce conducted an expedited review, a procedure that allows companies not individually examined during the original investigation to obtain their own subsidy rate rather than being assigned the all-others rate.
In the expedited review final results published July 5, 2019, covering calendar year 2015, Commerce calculated a de minimis subsidy rate of 0.21 percent for D&G and Portbec. A de minimis rate means exclusion from the order. For roughly seven years the companies shipped to the United States free of countervailing duty cash deposits under that determination.
The Committee Overseeing Action for Lumber International Trade Investigations or Negotiations, the U.S. petitioner coalition known as the COALITION, appealed. Its challenge was structural rather than arithmetic: it argued that Commerce lacked statutory authority to promulgate the expedited review regulation at 19 CFR 351.214(k) in the first place, and therefore lacked authority to grant company-specific rates through that route at all.
The litigation that followed reads like a case study in the durability of trade disputes.
In November 2020 the CIT remanded for Commerce to reconsider its statutory basis. In February 2021 Commerce concluded on remand that it did not have the authority. In August 2021 the CIT affirmed that conclusion and vacated both the regulation and the expedited review results, declining to reach the remaining substantive challenges. In April 2023 the Federal Circuit reversed, holding that Commerce does possess statutory authority to adopt the expedited review process, and remanded for the substantive issues to be addressed.
That put the case back at square one on the merits, five years in.
In April 2024 the CIT sustained several of Commerce’s determinations but remanded the agency’s decision not to attribute to D&G and Portbec subsidies received by their unaffiliated lumber suppliers. In September 2024 Commerce issued a second remand redetermination treating the companies as trading companies under 19 CFR 351.525(c) with respect to lumber purchased from unaffiliated Canadian suppliers and either remanufactured or resold into the United States.
In January 2025 the CIT sustained the trading company treatment but remanded the rate calculation. Commerce’s third remand redetermination in April 2025 recalculated using each company’s relative share of unaffiliated purchases and of total sales, producing an overall rate of 1.75 percent. In December 2025 the CIT sent it back once more, directing Commerce to reconsider documentation the companies had submitted regarding lumber purchased from importers after importation into the United States during 2015.
The fourth remand redetermination, issued April 17, 2026, accounted for those U.S. resales and produced the 1.05 percent figure. On July 21, 2026, the CIT issued final judgment sustaining the expedited review final results as amended by the second, third, and fourth remands. Commerce’s Aug. 6 notice implements that judgment.
The mechanics of reinstatement
Because the CIT’s judgment is final, Commerce has amended the expedited review results and D&G and Portbec are inside the order effective the date of publication.
Commerce will instruct U.S. Customs and Border Protection to collect cash deposits of estimated countervailing duties at the 1.05 percent rate on subject merchandise entered, or withdrawn from warehouse, for consumption on or after Aug. 6. The notice specifies that the cash deposit requirement remains in effect until further notice, meaning it will be superseded by whatever rate the companies receive in a subsequent administrative review.
Two practical points follow. First, cash deposits are estimates, not final liability. Final duty liability for any given entry is determined at liquidation, after an administrative review if one is requested. A company depositing at 1.05 percent may ultimately owe more or less. Second, the reinstatement is prospective. It applies to entries on or after publication, not retroactively to the seven years the companies shipped duty-free.
Why a 1.05 percent rate matters
On its face, a 1.05 percent countervailing duty is immaterial next to the combined antidumping and countervailing rate most Canadian producers currently face, which stands at 35.16 percent pending the outcome of the seventh administrative review. A remanufacturer paying roughly one cent on the dollar is in a dramatically better position than the industry norm.
But the significance of the Aug. 6 notice is not the rate. It is three things the case demonstrates about how the softwood file actually works.
The first is that exclusion is not permanent. Companies granted de minimis rates through expedited review have generally treated that status as settled. This case establishes that a petitioner challenge, sustained years later on a theory that has nothing to do with the company’s own conduct, can put a firm back inside an order. Any Canadian producer currently outside the order by virtue of an expedited review or a changed circumstances review should treat that status as contingent, and should be modelling the cash flow effect of reinstatement.
The second is the trading company doctrine. Commerce’s decision to treat D&G and Portbec as trading companies under 19 CFR 351.525(c) with respect to purchases from unaffiliated Canadian suppliers is the analytical move that generated the above de minimis rate. Under that regulation, subsidies received by an unaffiliated supplier can be attributed to the reseller or remanufacturer. For Canada’s remanufacturing sector, which buys rough lumber from primary producers and adds value through further processing, this is consequential. A remanufacturer’s own subsidy receipt may be negligible while its suppliers’ subsidy receipt is not, and the trading company analysis can bridge that gap.
The third is duration. Seven and a half years elapsed between the expedited review final results and the reinstatement notice, spanning two Federal Circuit trips and four remands. Companies budgeting for trade litigation on the assumption of a two or three year horizon are budgeting wrong.
The stumpage question underneath it all
Every round of the softwood dispute returns to the same fact pattern. Most commercial timberland in Canada is publicly owned, and provincial governments set the price harvesters pay for the right to cut, known as stumpage, through administrative processes rather than open auctions. Most U.S. timberland is privately owned and priced through arm’s length transactions.
The U.S. petitioners argue that administratively set stumpage constitutes the provision of a good for less than adequate remuneration, a countervailable subsidy. Canada argues that provincial systems reflect legitimate resource management by the owner of the resource, that the comparison to U.S. private markets is methodologically invalid, and that Commerce’s benchmark selections systematically overstate any benefit.
That disagreement has never been resolved on the merits in a way both sides accept. It has been managed, at intervals, through negotiated agreements: the 1986 memorandum of understanding, the 1996 Softwood Lumber Agreement, and the 2006 agreement that expired in 2015. Each bought roughly a decade of quiet and then lapsed, and each lapse was followed by a fresh U.S. petition.
The current round began with petitions filed in 2016 and orders published in 2017 and 2018. It has now run longer without a settlement than any prior round. The bilateral environment, with Section 232 metals tariffs, Section 338 duties scheduled for Aug. 19, and an unresolved question about the future of the Canada-United States-Mexico Agreement, does not favour the kind of quiet technical negotiation that produced earlier agreements.
Canada has won findings in its favour at various NAFTA, CUSMA, and WTO panels. Those findings have produced adjustments at the margin. None has removed the orders. The gap between winning a legal argument and changing a cash deposit rate is one of the defining features of this file.
Context: the wider softwood file
The D&G and Portbec reinstatement lands in an unusually active period for Canadian softwood lumber.
Commerce published preliminary results in the seventh administrative review on April 14, 2026, and issued a post-preliminary countervailing duty determination on June 30, 2026, superseding the initial preliminary findings from April 8. The review covers the period from Jan. 1, 2024 through Dec. 31, 2024. Preliminary work indicated a combined antidumping and countervailing rate of 24.83 percent for most Canadian producers, roughly ten percentage points below the 35.16 percent currently in force.
Preliminary determinations do not change cash deposit rates. Rates change only when Commerce issues final results, which are expected as early as late August 2026 and potentially as late as October if the deadline is fully extended.
That timing places two significant softwood developments within weeks of each other: a company-specific reinstatement already in force, and an industry-wide rate decision that could cut deposits by nearly a third. Canadian producers, their U.S. importers, and the customs bond providers who underwrite the entries are watching the second far more closely than the first, which is understandable and, based on what the D&G case demonstrates, incomplete.
The softwood dispute itself is now in its fifth formal iteration since the 1980s. Successive rounds have followed a recognizable pattern: U.S. petition, Commerce determination, Canadian challenge under NAFTA, CUSMA, or WTO procedures, partial Canadian success, negotiated settlement, expiry of the settlement, repeat. The current round has run without a negotiated agreement since the 2006 Softwood Lumber Agreement lapsed in 2015. Nothing in the present bilateral environment suggests a settlement is near.
Reactions and positions
Global Affairs Canada maintains a public position that U.S. duties on Canadian softwood lumber are unjustified and that Canada will continue to defend its industry through litigation. Successive Canadian trade ministers have issued statements to that effect following each administrative review milestone, and Canada has secured favourable rulings in several NAFTA and WTO proceedings without those rulings translating into duty removal.
The COALITION’s position, reflected in its litigation posture in this case, is that Canadian provincial stumpage systems constitute countervailable subsidies and that Commerce’s procedures should not permit companies to escape the order through mechanisms the petitioners regard as insufficiently rigorous. Its willingness to litigate the statutory authority for expedited review for seven years, and to prevail on the substance after losing on the threshold question, indicates a strategy oriented toward the long term.
Canadian producer associations have consistently framed the duties as a tax on U.S. homebuilders. That argument has gained traction in periods of U.S. housing affordability pressure and lost it when lumber prices are low. It has not changed the outcome of any administrative review.
The cash flow arithmetic
The financial mechanics of a countervailing duty order are frequently misunderstood, and the D&G case is a useful vehicle for setting them out.
When merchandise subject to an order enters the United States, the importer of record deposits estimated duties in cash at the rate in effect for that exporter on the date of entry. That money leaves the business immediately. It is not a paper accrual. For a producer shipping at the current combined 35.16 percent rate, more than a third of invoice value is tied up from the moment goods cross the border.
Those deposits sit with the U.S. Treasury until the entry liquidates. Liquidation may occur automatically after a set period, or it may be suspended pending an administrative review. Where a review is requested, liquidation waits for the review’s final results, which routinely arrive two to three years after the period of review closes. If the final rate is lower than the deposit rate, the difference is refunded with interest. If it is higher, the balance is owed with interest.
The practical consequence is that a lumber exporter’s working capital position is determined less by its sales than by the spread between deposit rates and eventual assessed rates, and by how long liquidation takes. Companies that have run this arithmetic properly hold reserves against the possibility that a review raises their rate. Companies that have treated deposits as a cost of goods sold rather than as a receivable with an uncertain recovery have been surprised.
For D&G and Portbec, the reinstatement means deposits begin at 1.05 percent on entries from Aug. 6. Whatever rate emerges from the first administrative review covering those entries will determine the final liability, and that review has not been conducted.
Customs bonds add another layer. Sureties underwriting continuous bonds for importers of subject merchandise reassess exposure when rates change. A material rate increase can trigger a demand for a larger bond or additional collateral, and that demand can arrive faster than the duty itself.
Implications for Canadian exporters and U.S. importers
For firms in the softwood supply chain, several practical points follow from the Aug. 6 notice.
Companies currently excluded from the order should verify the basis of their exclusion and whether it has been challenged. An exclusion resting on an expedited review determination that is under appeal is a contingent liability, and one that may crystallize with only the notice period the Federal Register provides. Finance teams should know the number.
Remanufacturers and resellers should examine their exposure under the trading company regulation. If a business model involves purchasing lumber from unaffiliated Canadian producers and reselling or remanufacturing for the U.S. market, the subsidy profile of those suppliers is relevant to the buyer’s own rate. Supplier due diligence in this context is not a formality.
U.S. importers of record should confirm that their broker’s cash deposit instructions reflect the current rate for each Canadian supplier, not a rate carried forward from prior entries. Rate changes tied to a specific publication date create a window in which entries filed on stale instructions generate underpayments that surface later at liquidation, with interest.
Documentation of U.S.-side purchases deserves attention. The fourth remand turned on whether D&G and Portbec could substantiate that certain lumber was purchased from importers after importation into the United States. That documentation reduced the calculated rate from 1.75 percent to 1.05 percent, a 40 percent reduction achieved entirely through recordkeeping. Contemporaneous records of where and from whom material was purchased have direct monetary value in a subsidy calculation.
Firms should also plan around the AR7 final results. If the rate falls to something near the 24.83 percent preliminary figure, the effect on cash flow is immediate and substantial, and importers holding inventory may want to align entry timing with the publication date. If the rate holds near 35.16 percent, plans built on the preliminary number need revisiting.
Reading the AR7 signal
The seventh administrative review deserves closer attention than the reinstatement notice, and the two should be read together.
Administrative reviews are how rates actually change. Commerce reviews a discrete twelve-month period, recalculates dumping margins and subsidy rates for the companies under review based on that period’s data, and issues final results that both set new cash deposit rates going forward and determine final liability for entries during the review period.
AR7 covers calendar year 2024. Preliminary results published April 14, 2026 and the post-preliminary countervailing determination of June 30, 2026 pointed toward a combined rate near 24.83 percent, against the 35.16 percent currently collected. A drop of that size would release meaningful working capital across the industry and reduce the per-thousand-board-feet cost of Canadian lumber delivered into the United States by a material margin.
Three cautions apply. Preliminary results move. The gap between preliminary and final determinations in this proceeding has historically been significant in both directions, and the post-preliminary determination in June already superseded the April figures. Second, the timing is uncertain: final results are expected as early as late August but can slip to October if the statutory deadline is fully extended. Third, a lower rate is not a settled rate. AR8 will follow, covering 2025, and the cycle continues.
What the D&G reinstatement adds to that picture is a reminder that company-specific outcomes can diverge sharply from the industry average, and that they can move for reasons unrelated to the company’s own commercial behaviour. A producer planning around the AR7 headline number without checking its own exposure to pending litigation is planning around someone else’s rate.
The broader lesson
There is a temptation in trade compliance to treat favourable determinations as endpoints. The D&G and Portbec case argues against that. A de minimis rate granted in 2019 survived until 2026 and then did not, on the strength of an appeal filed within months of the original determination and litigated by a petitioner coalition with the resources and the patience to see it through.
The lesson is not that exclusions are worthless. It is that they are positions in an ongoing proceeding rather than final settlements, and that the appropriate treatment on a risk register is a contingent liability with a probability attached, not a closed item.
For an industry that has been litigating the same fundamental question about provincial stumpage for four decades, that framing should not be surprising. It remains, on the evidence of how often companies are caught out, insufficiently internalized.