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# Canada's softwood loss: Ottawa stays silent
- URL: https://www.borealian.ca/softwood-panel-ottawa-silent/
- Published: 2026-10-21T19:40:57.000Z
- Updated: 2026-10-21T19:40:57.000Z
- Description: A NAFTA panel upheld U.S. countervailing duties on Oct. 5, and Ottawa has responded with silence. Mills now pay more than 45 per cent in combined duties and tariffs.
- Author: Beaverbrook
- Tags: Business & Markets, Trade

On Oct. 5, a NAFTA Chapter 19 binational panel affirmed the U.S. Department of Commerce's countervailing duty on Canadian softwood, according to [Commerce's notice](https://www.federalregister.gov/documents/2026/10/13/2026-20857/north-american-free-trade-agreement-nafta-article-1904-binational-panel-review-notice-of-panel?ref=borealian.ca). Canadian governments, associations and producers asked for the review on Nov. 14, 2017, [GHY International](https://www.ghy.com/trade-compliance/nafta-panel-upholds-us-cvd-canadian-softwood-lumber/?ref=borealian.ca) reports. Mills now pay more than 45 cents in U.S. duties and tariffs on every dollar of lumber they ship south.

The United States has long claimed that Canadian governments unfairly subsidise its lumber industry through [low stumpage fees](https://www.ctvnews.ca/atlantic/new-brunswick/article/us-softwood-lumber-tariffs-reduced-by-10-per-cent/?ref=borealian.ca), the price logging companies pay to harvest trees. The Department of Natural Resources sets Crown timber royalty rates monthly, and when prices are calculated for November, they will be based on the four-week average from October. The Crown (Canadian and provincial governments) own most of the timberland in Canada. Thus, rates are set administratively rather than competitively through private markets. It is this administrative rate that the U.S. government and lumber industry deem as uncompetitive and argue that it constitutes "dumping" under [*Title VII of the Tariff Act of 1930*](https://www.cbp.gov/trade/priority-issues/adcvd/antidumping-and-countervailing-duties-adcvd-frequently-asked-questions?ref=borealian.ca)*.*

A countervailing duty is meant to offset subsidies that Commerce finds a foreign government gives its producers. The panel twice sent the case back to Commerce before upholding it, and [Global Affairs Canada](https://www.international.gc.ca/controls-controles/softwood-bois%5Foeuvre/recent.aspx?lang=eng&ref=borealian.ca) says the decision "effectively concludes this challenge." For mills, that ends nearly nine years of hoping a tribunal would lower the bill.

The bill itself has grown while the case ran, on Global Affairs Canada's own rate tables. The combined anti-dumping and countervailing rate for most Canadian firms is 35.16 per cent, Global Affairs Canada reports, up from 14.40 per cent under the previous review. Lumber mill Canfor pays 47.59 per cent and West Fraser 26.47 per cent. A 10 per cent Section 232 tariff, imposed by the president on national-security grounds, has sat on top since Oct. 14, 2025.

Those rates fall on a large industry. Natural Resources Canada says the forest sector supports "nearly 200,000 workers" and more than $20 billion of GDP. In 2024, two-thirds of Canada's softwood output was exported, and nearly 90 per cent of those exports went to the United States, [NRCan](https://www.canada.ca/en/natural-resources-canada/news/2025/12/advancing-protections-and-support-for-canadas-forest-sector.html?ref=borealian.ca) reports.

So far, Ottawa's reaction to the loss has been mute. Global Affairs Canada's own page shows Chrystia Freeland and Mary Ng issuing statements on U.S. rulings from 2017 to 2024\. Yet, as of Oct. 13, GAC has yet to publish a release.

That ruling matters greatly to sawmill owners who will now be deciding whether to keep a shift running or reduce staff.

The silence fits a longer pattern. The government announced a forest sector task force on Nov. 26, 2025, and its report reached Tim Hodgson, the minister of energy and natural resources, on April 16, 2026\. He released it on June 3, 48 days later, while leaving mills in the lurch as they weigh closures.

The government's excuse is that it is handling what it can. "We are focused on what we can control – building Canada strong with Canadian expertise, using Canadian lumber," Carney said in [August 2025](https://www.pm.gc.ca/en/news/news-releases/2025/08/05/prime-minister-carney-announces-new-measures-transform-canada?ref=borealian.ca). NRCan put federal support for the sector at "over $2.35 billion" in [December 2025](https://www.canada.ca/en/natural-resources-canada/news/2025/12/advancing-protections-and-support-for-canadas-forest-sector.html?ref=borealian.ca). Support of that kind helps a mill survive a bad year and leaves the 45 per cent levy on its main market in place.

Further, while admirable, building more with Canadian lumber helps only at the margin, because the domestic market takes about a third of what our mills produce. Hodgson himself has recognized the cost of inaction. "Mills are closing, Canadians are losing jobs, and communities are suffering, due to tariff pressures, market changes and more," he said in June. Canfor said in July that it would permanently close its Fox Creek, Alta., sawmill, citing weak markets, fibre supply and "persistent high US softwood lumber duties and tariffs."

The [U.S. Lumber Coalition](https://uslumbercoalition.org/press-release/nafta-panel-reconfirms-canadian-softwood-lumber-industry-subsidized-duties-appropriate-under-u-s-law/?ref=borealian.ca), which represents U.S. producers, says the ruling confirms that Canadian lumber is subsidized. Its executive director, Zoltan van Heyningen, urged Canada to focus "on right-sizing its lumber industry to market realities." The coalition's members likely gain most from that advice, since a smaller Canadian industry leaves more of the American market to them.

Van Heyningen is in effect telling Canada to shrink. Doing so would hand American mills a market Canadian firms have won on cost and fibre.

The Conservatives say Carney has failed "to secure a deal with the Americans," and that duties and tariffs have "tripled to 45 per cent since he became Prime Minister." On Global Affairs Canada's figures, the rate in force when he took office was 14.40 per cent. Any deal would still need a Canadian offer, which the government has not described in public.

The anti-dumping and countervailing rates rest on U.S. trade-remedy law, which Commerce administers and Congress could change. The Section 232 tariff is a separate presidential measure, which the president could lift. In our view, the Canadian government needs to learn from its American counterparts and back our industry as they face mercantilist competition from our southern neighbour. Stumpage fees are a product of our political history, not a cleverly devised dumping strategy. The government needs to go beyond temporary financial supports and aid the industry in competing in other ways and in other markets.

The forestry sector is one of Canada's largest contributors to GDP and one of our largest employers. It is a centre for innovation and environmental management. This sector deserves a government with a plan. Continued silence and half-measures are leaving the industry to wither away. Carney's Liberals need to move past the rhetoric and show Canadians that they can negotiate with the Americans and support our industry in diversifying to new markets. So far, all we have seen is a government that laments the status quo but does little to actually change it.