"So I think your argument is that because we buy so much from overseas relative to how much we sell then we can have tarrifs without fear of retaliation."
My argument is that just because we impose fines on a percentage of trade with a given country does not mean we cannot thus claim to be advocates of free trade. The fact is that trade with Canada has boomed over the past decade+, with the United States consuming all but a minority of Canadian exports. Our markets are incredibly open to their goods, and compared to most other nations our barriers/fees on exports from other nations are small.
I'd argue the tariffs are significant. And the net result is just the same as a tax. The American government collects the money home buyers pay more. But this is worse than a tax because it does everything a tax does plus invites retaliation.
"The 12.6 percent duty will be added to the 19.3 percent tariff put on Canadian softwood lumber in August"
"The U.S. lumber industry had been pressing for tariffs, saying they're needed to save jobs, while opponents say they will drive up prices of wood products for U.S. consumers. An economist for a homebuilders group says the two tariffs would add about $1,500 to the price of an average home."
http://forests.org/archive/canada/imwoodta.htm