The US is set to maintain tariffs on certain Canadian lumber imports after its trade commission found US industry was “materially harmed” by the goods.
The 4-0 decision comes after the US Commerce Department failed to reach an agreement in the long-running trade dispute last month.
The tariffs affect Canadian softwood imports valued at almost $5.7bn (C$7.3bn; £4.2bn) in 2016.
Canada has appealed to international panels in the dispute.
It is challenging the findings at the World Trade Organisation and via the dispute mechanism of the North American Free Trade Agreement (Nafta).
The tariffs, outlined by the Commerce Department in November, would add duties that range from about 10-24%, depending on the company, which is lower than an earlier proposal.
Canada has said the tariffs were determined using flawed methodology.
The ruling comes amid a growing number of trade disputes between the US and Canada and is likely to complicate already tense negotiations over Nafta.
Susan Yurkovich, president of the BC Lumber Trade Council in Canada, called the ruling “completely without merit”.
“The ITC finding of ‘injury’, despite the current record-setting profitability of the US lumber industry, makes it very clear that this was not an objective evaluation of the facts,” she said.
The US moved to slap hefty tariffs on the import of Canadian softwood lumber, a common construction material used in homebuilding, in April.
But this summer the Commerce Department said it would postpone a final decision in the investigation in hopes of reaching a “negotiated solution”.
In November, the department said talks had failed. It said its investigation determined that Canadian softwood lumber was being unfairly subsidised and sold in the US below cost and outlined the tariffs.
The International Trade Commission ruling on whether US producers have been harmed was the next step.
A trade group for the US lumber industry, one of the organisations that sought an investigation, welcomed the International Trade Commission’s decision.
“Now, with a level playing field, the US lumber industry, and the 350,000 hardworking men and women who support it, can have the chance to compete fairly,” said Jason Brochu, co-chair of the US Lumber Coalition.