Lower than expected U.S. penalties on softwood lumber exports from Canada are doing little to temper the dismay of the federal government in Ottawa.

International Trade Minister Mary Ng is calling the latest duties "baseless," "unwarranted" and "unfair."

The key final rate of 8.59 per cent is significantly lower than the current rate of 17.91 per cent, as well as the 11.64 per cent proposed in a preliminary decision issued earlier this year.

But Ng says the duties are unjustified no matter the level, and will cause undue hardship to both Canada's forestry industry and consumers in the U.S.

She says Ottawa will challenge the latest finding under the U.S.-Mexico-Canada Agreement's dispute resolution system.

Ng is nonetheless leaving the door open to a resolution to the years-long dispute, which some U.S. lawmakers and observers have been calling for to help ease record levels of inflation south of the border.