WASHINGTON, July 19 (Reuters) - Little more than a week before the Bush administration sets course in a lumber trade dispute with Canada, a group of U.S. House and Senate members Thursday warned President George Bush that punitive import duties could hurt the U.S. economy. The Commerce Department is expected to decide by July 27 whether to set preliminary countervailing duties on softwood lumber imports from Canada and whether those duties should be retroactive to April 23. An announcement of the decision could be delayed a few days, however. The U.S. investigation of Canadian provinces' lumber subsidies and Canadian export policies was launched in April at the request of U.S. lumber firms, shortly after a bilateral agreement limiting Canadian shipments expired. Softwood lumber is used in homebuilding and remodeling. Canada's exports, valued at about $6.6 billion (C$10 billion), make up about one-third of the U.S. softwood market. ``Creating arbitrary trade restrictions could weaken consumer confidence and have far-reaching effects on this sector (housing) of our economy,'' the U.S. lawmakers said in a letter to Bush. The letter also claimed that U.S. import duties could raise the price of a new home by $2,000 to $4,000, a charge U.S. lumber firms reject. Among the lawmakers signing the letter were Sen. Don Nickels of Oklahoma, a member of the Republican leadership, and Rep. Jim Kolbe, a Republican from Arizona who is considered a trade specialist in the House of Representatives. The letter was a rebuttal to another letter sent earlier this week to Commerce Secretary Don Evans, in which a group of senators argued that Canadian lumber exports have surged since all trade controls expired on March 30. These senators are calling on the administration to impose retroactive import duties. U.S. lumber firms and labor unions are seeking a 39.9 percent countervailing duty plus anti-dumping duties in the range of 28 to 36 percent. Canada denies any improper subsidies or export practices and argues there should be no controls on lumber trade with the United States. The Canadian argument has been joined by U.S. homebuilders and lumber retailers, such as Home Depot Inc. (NYSE:HD - news), who want plentiful supplies and low prices.