Canada and the United States have reached a preliminary framework agreement that would phase out the most economically damaging tariffs on Canadian softwood lumber, aluminium, and steel exports over an 18-month period, according to officials familiar with the negotiations who spoke to Plauste on condition of anonymity. A formal announcement is expected within 10 days.
The deal, if finalised, would resolve a trade dispute that has cost Canadian exporters an estimated $4.2 billion annually and has been a persistent source of friction between Ottawa and Washington since 2017. Canadian lumber producers in British Columbia and Quebec have been particularly affected, with the 14.5% countervailing duty adding significant costs to products already competing in a softening US housing market.
Sector Impact
The immediate beneficiaries would be Canada's softwood lumber producers, whose shares rallied 3-7% on Monday after Bloomberg first reported the framework agreement. West Fraser Timber rose 6.2%, Canfor Corporation gained 7.1%, and Interfor Corp added 4.8% on heavy volume. Analysts estimate that removing the lumber duties could add between $0.80 and $1.20 per share to annual earnings for the major producers.
Canadian aluminium and steel producers would also benefit, though the impact is less concentrated. Novelis Canada, Rio Tinto's Arvida smelter, and Algoma Steel are among the primary beneficiaries of tariff relief on these metals.
Political Context
The agreement represents a significant diplomatic achievement for Canada's Trade Minister, who has made bilateral trade normalization a central priority. It also reflects a shift in Washington's calculus, with the US construction industry — a significant political constituency — having lobbied aggressively against lumber tariffs that have raised the cost of new home construction by an estimated US$14,000 per unit.