The U.S. Court of International Trade has eliminated a rule that allowed foreign companies such as Canadian lumber producers to have individual tariff rates lowered.

The rule allowed foreign producers to quickly apply for lower countervailing duty rates if they weren’t individually investigated by the Commerce Department in its original duty inquiry. The Aug. 18 CIT ruling reinstates higher duties for some Canadian lumber companies, although it will apply only prospectively.

The ruling comes after the U.S. Department of Commerce said it may prospectively raise the current duties on softwood lumber imports from Canada later this year, as part of a trade spat that has gone on for decades between the two countries.

British Columbia is Canada’s biggest lumber exporting province to the U.S. The BC Lumber Trade Council declined to comment on the ruling.

The threat of higher duties on Canadian lumber imports follows an unprecedented rally that lifted prices to record highs in May as U.S. demand from home building and renovations exceeded supplies during the pandemic. 

North American producers have since increased their production, with some Canadian-owned companies investing millions of dollars to expand their U.S. sawmill capacities, to feed what is expected to be long-term demand after rock-bottom borrowing rates spurred a home-building boom.

If the remand results are sustained after all appeals, the Department of Commerce will stop conducting expedited reviews, CIT Chief Judge Mark Barnett said, adding that the department didn’t have proper authority.