Canada is escalating its dispute with the U.S. over import duties imposed on softwood lumber products from the country.

The U.S. and Canada have been embroiled in a trade dispute over duties on softwood lumber for decades, with U.S. lumber officials seeking government restrictions on Canadian imports through countervailing duty and antidumping laws.

In July, the Commerce Department continued imposing duties on the Canadian timber products, ruling that Canadian softwood lumber would be subject to a 7.99% duty rate.

“To the Canadian softwood industry … they can expect and continue to count on their government standing on their side,” Mary Ng, Canada’s trade minister, said during a news conference on Tuesday. “These duties are unjustified, and unwarranted, and they’re illegal because they go against [the United States-Mexico-Canada-Agreement].”

Ng said the trade ministry has filed notices of intent to commence a judicial review of the duties under the rules of the USMCA trade pact.

The United States based its latest duty rates on data that Canadian timber is harvested from federal and provincial lands, while most U.S. timber is harvested from private land at market rates.

Officials for the U.S. Trade Representative (USTR) said the duties are a way to ensure a level playing field between the United States and Canada.

“We are prepared to discuss another softwood lumber agreement when Canada is ready to address the underlying issues related to subsidization and fair competition so that Canadian lumber imports do not injure the U.S. industry,” the USTR in an emailed statement to Reuters.

Canada exports about $8 billion worth of softwood lumber to the world annually, with the U.S. being the largest buyer. In 2022, the U.S. imported more than 12.7 billion board feet of lumber from Canada. 

U.S. lumber producers said the Canadian exports would hurt U.S. companies without the duties imposed on imports.

“The softwood lumber trade cases help offset Canadian lumber subsidies and dumping, allowing U.S. lumber manufacturers to compete in a fair market, invest in their businesses, and supply more U.S. lumber milled by U.S. workers to build U.S. homes,” Andrew Miller, chairman of the U.S. Lumber Coalition and CEO of Stimson Lumber, said in a news release. 

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