U.S.-Canada Softwood Lumber Trade: Current Issues for Congress

The United States and Canada have one of the largest bilateral commercial relationships in the world and have maintained largely duty-free trade under three successive agreements approved by Congress—the 1989 U.S.-Canada Free Trade Agreement, the 1994 North American Free Trade Agreement (NAFTA), and the 2020 United States-Mexico-Canada Agreement (USMCA, P.L. 116-113). Trade in softwood lumber—primarily used in residential construction, remodeling, and repair—has been one of the most controversial and enduring disagreements in the U.S.-Canada trade relationship. U.S.-Canada disputes over softwood lumber, sometimes referred to as the “lumber wars,” revolves around different pricing policies and forest management structures in the two countries. U.S. officials have alleged that Canadian softwood lumber benefits from federal and provincial governments subsidies. Canadian officials deny that Canada’s forest management policies constitute a subsidy and maintain that its comparative advantage comes from more efficient industry practices. Consecutive U.S. Administrations have used a range of trade policy tools to mitigate the effects of perceived unfair Canadian practices in softwood lumber trade. Although Canadian lumber products can qualify for duty-free treatment under USMCA rules, since the 1980s, the United States government has repeatedly taken actions, such as imposing antidumping (AD) and countervailing duties (CVD) to address the perceived unfairness of Canada’s approach to its lumber industry. The United States and Canada have negotiated several sectoral agreements to resolve these trade disputes. Under the latest agreement, the 2006 Softwood Lumber Agreement, the United States agreed not to pursue certain trade actions, including AD/CVDs, against Canadian softwood lumber imports, while Canada agreed to impose quotas and/or export charges on its lumber if U.S. lumber prices fell below a specified level. After the expiration of that Agreement in 2015, the United States and Canada engaged in negotiations toward a new lumber agreement but have not reached a resolution. In 2017, the United States began reimposing AD/CVDs on imports of Canadian softwood lumber. Canada has challenged the U.S. AD/CVDs. In 2025, President Trump imposed broad tariffs on Canadian goods under the International Emergency Economic Powers Act (IEEPA; 50 U.S.C. §§1701 et seq.) and global sectoral tariffs, including on Canada, under Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862, as amended). These tariffs were applied on top of existing AD/CVDs. These actions heightened U.S.-Canada trade tensions. In 2026, the United States, Mexico, and Canada are slated to undergo a joint review of USMCA, which could include discussions about tariffs and other trade issues. In 2024, the United States imported about $23 billion worth of wood products—nearly half from Canada ($11 billion). Some Members of Congress have supported the Trump Administration’s approach on trade with Canada, including with respect to imposing tariffs on Canadian products like softwood lumber. Other Members have questioned the use of tariffs on Canadian products, given Canada’s high level of integration with the U.S. economy, and expressed concerns about the potential impacts on U.S. businesses and consumers. Congress has constitutional authority over foreign commerce and tariffs, and a key issue for the 119th Congress is whether, and to what extent, to exercise that authority and oversight over U.S. trade policy, including tariffs on Canadian softwood lumber imports. Previous Congresses have debated restrictions on imports of Canadian softwood lumber, called for the negotiation of a U.S.-Canada softwood lumber agreement, and directed the U.S. International Trade Commission (USITC) to investigate the Canadian softwood lumber industry under Section 332 of the Trade Act of 1930 (19 U.S.C. §1332). Congress also has an oversight role related to the scheduled 2026 USMCA joint review, and Members could consider whether to use that venue to express their views on Canadian softwood lumber tariffs and Canadian policies related to lumber.