U.S. to Cut Canadian Lumber Duties by 10% — Rate Stays at 35%

Why It Matters

Even with the cut, the effective duty adds about $10,000 to a new U.S. home, squeezing construction margins and deepening financial pressure on Canadian lumber exporters pending a final ruling.

Key Takeaways

• Effective duty stays near 35% due to Section 232 tariff.
• Antidumping rate cut to 10.66% from 20.53% for 2024.
• Canadian imports fell 28% YoY, prices dropped $60 per cubic metre.
• Canfor closed two U.S. mills, removing 350 M board feet capacity.
• Final duty determination due August 2026 will affect housing market costs.

Pulse Analysis

The softwood lumber dispute, which has simmered since 1982, entered a new phase in April 2026 when the U.S. Commerce Department announced a preliminary reduction of the combined antidumping and countervailing duties on Canadian lumber. The antidumping component dropped to 10.66% from a peak of 20.53%, and the countervailing rate slipped marginally to 14.17%. However, the Section 232 tariff—imposed under the Trade Expansion Act of 1962—adds a flat 10% surcharge, leaving the overall duty burden at roughly 34.8%. This hybrid structure underscores the complexity of U.S. trade policy, where a nominal rate cut can be offset by separate tariff mechanisms, preserving a high cost barrier for Canadian exporters.

Industry fallout has been swift. Canadian softwood imports to the United States fell 28% year‑on‑year, and the price per cubic metre collapsed from $218 to $158, a $60 decline that translates into lower margins for U.S. homebuilders. The National Association of Home Builders estimates the combined duties add at least $10,000 to the price of a new single‑family home. Canadian producers have felt the strain as well; Canfor permanently shut its Estill and Darlington sawmills in South Carolina, eliminating 350 million board feet of capacity. The broader market impact includes tighter supply, higher construction costs, and heightened uncertainty for both sides of the border.

Stakeholders are positioning for the final ruling slated for August 2026. The U.S. Lumber Coalition framed the preliminary cut as evidence of continued unfair trade, while British Columbia’s Premier and the province’s Forests Minister decried the lingering tariffs as harmful to both economies. Ottawa has pledged roughly $0.9 billion in loan guarantees through the BDC’s Softwood Lumber Guarantee Program, yet officials argue financial aid cannot replace a negotiated settlement. The upcoming final determination will shape the cost structure of North American housing, influence forest‑sector employment, and test the resilience of U.S.–Canada trade relations.