The gap in total factor productivity (TFP) growth in sawmill and wood preservation industry widened between the US and Canada over the period 1958 to 2003. Stages of the softwood lumber dispute had different effects on TFP growth. The strong housing market in the US increases imports of Canadian softwood, while the exchange rate and other variables have no effect. Trade restrictions since 1992 have been unable to stem imports due to strong US demand.