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Canadian softwood lumber is pictured at the Port of Vancouver Lynnterm terminal in North Vancouver, B.C.Ben Nelms/The Globe and Mail

Faced with ongoing investigations by the U.S. International Trade Commission and a protectionist president-elect heading to the Oval Office in a matter of days, Canada's oft-embattled softwood lumber sector could soon face a rough-and-tumble future that looks a lot like the past.

Donald Trump has long shown interest in renegotiating the North American Free Trade Agreement upon taking office, leaving trade partners in limbo. The recent expiration of the 2006 Softwood Lumber Agreement is already a sore point with Canada's largest trading partner. And last week, the USITC announced it had found "reasonable indication" that Canadian softwood lumber product imports has "materially injured" U.S. industry.

The pair of events leave a lot hanging in the balance for the softwood sector in 2017. Some see a year ahead with a familiar, and potentially costly, step backward. Others see a chance to, in a roundabout way, stake a Canadian claim in Mr. Trump's economic vision.

"I don't want to project a number in what a duty might be, but I wouldn't be surprised if we were slapped with a penalty that could have significant impact on export volumes to the U.S.," said Paul Whittaker, chief executive of the Alberta Forest Products Association, of softwood lumber.

Nearly 7 per cent of total Canadian exports came from the forest industry in 2015, totalling at $32.7-billion, according to Natural Resources Canada.

Like many others in the industry, Mr. Whittaker disagrees with a key argument by his U.S. peers – that Canadian softwood lumber is unfairly subsidized by provinces, giving Canadians an American market advantage. He also believes that, once again, Canada's softwood sector may be forced to take the dispute to the World Trade Organization to make their case.

It's the latest in a series of disputes that goes back decades. The most recent major truce, 2006's Softwood Lumber Agreement, ended an average 27-per-cent tariff on imports of Canadian softwood that saw the U.S. collect billions of dollars. It expired in October 2015.

The U.S. Lumber Coalition has since petitioned the U.S. ITC to "restore the conditions of free trade," arguing that Canadian imports "surged" since the expiry. According to the American coalition, Canadian import volumes were up 33 per cent in the first eight months of 2016 over the same period the year prior.

That all led to last week's ITC declaration that there was is a "reasonable indication" that Canadian imports were hurting U.S. industry, prompting further investigation. Zoltan van Heyningen, the U.S. coalition's executive director, declined to comment but said the group was "not surprised" by the ruling.

Neil Miller, who runs Alberta Spruce Industries Ltd., a small lumber producer near Edmonton, exports about a third of his product to the U.S. He says he expects to see duties on his goods close to the low Canadian dollar's baked-in discount. "I'm looking at upwards of 30 to 40 per cent," he said.

And then he expects history to repeat itself. After a few years of debate, he said he expects "we'll finally end up at the [World Trade Organization] and they will likely rule in our favour yet again."

Susan Yurkovich, chief executive of British Columbia's Council of Forest Industries, hopes the two countries can reach a managed trade deal in the first quarter of the year. If not, she expects interim duties to come into place, possibly by April, which could prompt drawn-out litigation.

"It's not a new fight," she said. "We have been found not to be subsidized, and not to have injured the [U.S.]industry, and I fully expect that's where we'll get to again."

Adding into the mix an incoming president elected on a wave of protectionist sentiment, and Canadian stakeholders have a new variable to deal with. "I don't think president Trump is an outlier – I think it's a sentiment that's been growing in the U.S.," Mr. Whittaker says of American hostility to foreign industry.

But with home construction on the rise, Canadian lumber could play a key role in Mr. Trump's efforts to boost the U.S. economy. Housing starts in the U.S. hit a nine-year high in October – though they took a fall in November – but it's prompted optimism from some including Ms. Yurkovich.

"I think the Trump administration is going to be pragmatic," she said. "It's going to look at what is going to harm the economy, or not, and I think ... softwood lumber is a very significant input into growing the economy."

Seth Kursman, the vice-president handling government affairs with Resolute Forest Products Inc. in Montreal – which has holdings primarily in Ontario and Quebec – points to Mr. Trump's lofty proposed goal of raising U.S. annual GDP growth to 4 per cent or higher as an opportunity for Canada.

Recent numbers from the U.S. National Association of Home Builders suggest that for every $1,000 added to the median new home price, nearly 153,000 people are priced out of buying a home. Mr. Kursman says the U.S. doesn't have enough softwood lumber supply for its own needs – and so adding a tariff to Canadian product could raise costs high enough to prevent thousands of Americans from becoming homeowners.

And, given that home building usually represents between 15 and 18 per cent of U.S. GDP, a lumber tariff could significantly hinder Mr. Trump's lofty goals fore economic growth. "Canada should vigorously defend itself, and should not give in passively and be bullied and intimidated," Mr. Kursman says.

Others stakeholders including Mr. Whittaker believe it'll take more clear, open discussions to win back American favour. "It behooves us to probably do a far better job of explaining, to critical decision-makers in the U.S., the importance of two-way trade and the importance of industries like softwood lumber to the U.S. economy."

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