(Bloomberg) -- The southern US is poised to surpass Canada’s long-held dominance over the North American lumber industry as decades of trade restrictions take a toll on its northern neighbor.

Most Read from Bloomberg

• From Housing to Immigration, Key Ballot Initiatives and Local Races to Follow

• Istanbul Tries Free Public Transit to Help Job Seekers

• The Answer To Making Cities More Family-Friendly? Courtyards

• In Warsaw, Falling Road Deaths Signal a Traffic Safety Turnaround

• Chicago Mayor Seeks Property Tax Hike, Breaking Campaign Vow

The US region is set to eclipse Canada for softwood lumber capacity for the first time since at least 1970, according to commodity pricing agency Fastmarkets. It’s a remarkable turnabout that signals how much a key Canadian resource sector has diminished due to years of US duties and other challenges including wildfires, land-use regulation and insect infestation.

The US hiked import duties on Canadian softwood lumber by almost 81% in August, the latest move in a simmering four-decade dispute between the trading partners. Analysts anticipate that levies — currently at 14.54% — could double again by next year under the Commerce Department’s annual review.

The measures show how trade policies can reshape an industry, creating new winners and losers in the process. Import restrictions have been a hot topic during the US election, with Republican candidate Donald Trump calling for sweeping tariffs on foreign goods entering the US.

The US has long accused Canada’s C$10 billion ($7.2 billion) industry of dumping low-priced wood into the country and argued that government fees Canadian loggers pay to harvest timber amounts to a subsidy. The dispute has hurt BC, where forest products accounted for a quarter of the value of all exported commodities in 2022.

Further levies could be “quite devastating for the sector,” said Kurt Niquidet, chief economist of the BC Council of Forest Industries. “You would see widespread curtailments throughout not just BC, but across Canada.”

As Canadian sawmills get squeezed by high costs and lower revenue — most notably in the forest-rich western province of British Columbia, the US South is enjoying gains in the industry. The US Lumber Coalition has credited the duties for a robust boost to American investment and capacity.

North America lost 4% of sawmill capacity through closures this year alone — and more than 40% of that was in BC, according to Dustin Jalbert, senior economist at Fastmarkets.

Forestry firm Canfor Corp. said in September it would close two BC sawmills by year end and take a C$100 million writedown, citing the duties as well as a lack of wood supplies. West Fraser Timber Co., the world’s largest lumber manufacturer, and smaller rivals Interfor Corp. and Western Forest Products Inc. have also suspended or shuttered western Canadian mills.