The long-running US dispute over Canadian softwood lumber is moving beyond Canadian sawmills. West Fraser remains under a fresh US duty review, while a separate customs case involving Canadian western red cedar processed in New Zealand has brought origin, processing and trade routes under closer scrutiny.<\/p>\n
US Customs and Border Protection (CBP) has upheld a finding that Coastal Specialty Forest Products, Inc., trading as Coastal Forest Products, evaded antidumping and countervailing duties by importing Canadian-origin softwood lumber through New Zealand.<\/p>\n
The September 11 decision confirmed an earlier CBP finding and focused on whether processing in a third country was sufficient to change the legal origin of the lumber.<\/p>\n
The case involved western red cedar supplied from Canada, processed in Auckland by Herman Pacific Ltd, or Hermpac, and then shipped to Coastal in the US. Western Forest Products was identified as the Canadian supplier. Hermpac itself was not found to have evaded US duties; the formal finding concerned Coastal as the US importer.<\/p>\n
CBP officers spent four days in Auckland examining Hermpac\u2019s records and production processes. They sought to establish whether the work carried out in New Zealand had changed the Canadian lumber sufficiently for it to qualify as New Zealand-origin material under US customs rules.<\/p>\n
CBP concluded that it had not. The cedar had been dried and further processed in New Zealand before being exported to the US, but Customs found that those operations had not altered the lumber\u2019s basic character and use sufficiently. The material therefore remained Canadian in origin and continued to fall under the US antidumping and countervailing duty orders on Canadian softwood lumber.<\/p>\n
West Fraser remains under fresh US review<\/strong><\/p>\n At the same time, Canada\u2019s largest producers remain tied up in the administrative review process that has shaped the dispute for years.<\/p>\n West Fraser was selected as a mandatory respondent in the eighth US administrative reviews of both the countervailing and antidumping duty orders in 2026. Under the seventh review, the latest post-preliminary calculation published in June put West Fraser\u2019s combined rate at 20.92%, consisting of a 4.77% antidumping rate and a 16.15% countervailing rate.<\/p>\n Those figures were still subject to final determination and were not yet the final duty rates.<\/p>\n The calculation was below the 26.47% combined rate applied to West Fraser following the amended final results of the sixth administrative review, but the level remains high in West Fraser\u2019s main export market.<\/p>\n The West Fraser review and the New Zealand customs case concern different parts of the same dispute. Canadian producers are contesting subsidy calculations and dumping margins, while US Customs is examining whether processing in third countries changes the legal origin of Canadian lumber.<\/p>\n The Auckland case was about origin, not the final port of shipment<\/strong><\/p>\n Canadian western red cedar travelled across the Pacific to Auckland, was processed there and was then shipped to the US.<\/p>\n High US duties on Canadian softwood lumber create an incentive to use alternative processing and supply chains. Under US customs rules, however, moving lumber through another country does not by itself change its origin.<\/p>\n The test is whether the product has undergone a substantial transformation. US authorities examine whether the resulting product has changed sufficiently in name, character or use, rather than simply whether additional processing or value has been added.<\/p>\n In Coastal\u2019s case, CBP decided that the processing in New Zealand did not meet that threshold. Timber processors routinely buy material from several origins, carry out drying, machining, resawing or other finishing work and then sell the finished product into third markets. When the original material comes from a country subject to US trade-remedy duties, the processing carried out in the intermediary country can determine the tariff treatment on arrival in the US.<\/p>\n New Zealand processors face closer US scrutiny<\/strong><\/p>\n Hermpac was not found to have evaded duties, but US Customs inspected its production operations, reviewed company records and used those findings in its case against the American importer.<\/p>\n The investigation therefore reached beyond the US importer and into the production process of a third-country manufacturer.<\/p>\n If Canadian or other high-duty material is imported into New Zealand, processed and later shipped to the US, the exporter and importer may have to demonstrate that the processing was substantial enough to establish a new origin. A New Zealand invoice or shipment from a New Zealand port is not sufficient on its own.<\/p>\n Documentation also played a role in the Coastal case. The importer argued that the cedar had become a New Zealand product after processing, while other documents in the supply chain still referred to Canada as the country of origin. Customs can use such inconsistencies when examining an origin declaration.<\/p>\n New Zealand already faces its own US tariffs<\/strong><\/p>\n The case comes as New Zealand exporters are already dealing with a separate US tariff burden.<\/p>\n The US imposed an additional 10% Section 232 tariff on certain softwood lumber products in October 2025, on top of existing measures affecting specific countries and products.<\/p>\n New Zealand timber exporters had warned that even relatively modest tariffs could alter the economics of the US market, particularly for higher-grade clear wood used in mouldings and appearance applications.<\/p>\n That market differs from the structural framing lumber at the centre of the US-Canada dispute, but the two can overlap when Canadian material enters a New Zealand processing chain.<\/p>\n A processor can therefore face the tariff applying to New Zealand exports while also having to establish whether Canadian-origin material has been transformed sufficiently to qualify as New Zealand-origin product.<\/p>\n The US dispute is moving further down the supply chain<\/strong><\/p>\n The Canadian softwood lumber dispute has traditionally centred on stumpage systems, subsidy allegations and mill-specific duty rates. Those issues remain at the centre of the continuing reviews involving West Fraser, Resolute and other Canadian producers.<\/p>\n US Customs is now also following Canadian-origin lumber through processors in third countries and examining what happened to the material before it reached the US border.<\/p>\n The origin question can extend through drying, machining, resawing, remanufacturing and re-export.<\/p>\n Processors buying Canadian-origin softwood lumber and selling finished material into the US may have to determine whether their production steps are sufficient to establish a new country of origin under US rules.<\/p>\n The dispute is therefore spreading from Canadian mills into the processing and trade routes used before the lumber reaches the US market.<\/p>","protected":false},"excerpt":{"rendered":" The long-running US dispute over Canadian softwood lumber is moving beyond Canadian sawmills. West Fraser remains under a fresh US duty review, while a separate customs case involving Canadian western red cedar processed in New Zealand has brought origin, processing … Continue reading