Ontario/Quebec Business Trends
More Tariffs By U.S. Among Many Issues Facing Canadian Lumber Suppliers
By Richard Lipman
Guest Writer
The trend of big picture trade issues causing concern and uncertainty continues to affect the landscape for eastern Canadian lumber producers. Forest fires too are very devastating this summer. Industry and government continue to work to control what they can and to plan for the future. As the Quebec summer construction holiday wrapped up, Natural Resources Canada price data shows eastern SPF 2×4 current and 4-week average prices at $610 Cdn. and the 52-week average at $570.
The U.S. has announced a 50 percent tariff on a wide range of imported goods from Canada, in retaliation for what President Trump called “unequal treatment” of some U.S. products. Following the announcement, the leaders agreed to intensify trade talks in a bid to resolve the trade frictions between the two countries.
These new tariffs were set to go into effect in mid-August. The proposed new tariffs will apply regardless of whether the product was included under CUSMA, which Canada says is a direct violation of CUSMA. This will add further hardship. Around 95 percent of Ontario’s exports of forest products go to the U.S., according to FedNor, the federal economic development agency for northern Ontario. They say there are 10 Northern Ontario communities where at least 20 percent of community income is connected to forestry. Not all forestry exports will be impacted. Some are already covered by other rules and the new measures include certain paper, wood and even value-added wood products. Producers know that the cost of the tariffs will have an impact, but continuing and increasing uncertainty will also result if these tariff measures move ahead. In addition, there have also been suggestions that other tariffs could be imposed over Canadian wildfire smoke that has ended up on the U.S. side of the border.
The Forest Products Association of Canada (FPAC) recently spoke out on the proposed U.S. tariffs and potential threat to Canada’s Forest Sector. They noted that “Canadian forest products already face significant trade barriers in the United States, including long standing duties on softwood lumber and more recent Section 232 tariffs. At a time when our American neighbours are struggling with affordability and the need to build more homes, these actions will unfortunately hurt them too.”
Remarked Derek Nighbor, President and CEO of FPAC and the Canadian Wood Council, “Forest sector communities across Canada have been dealing with escalating and unnecessary U.S. trade actions for far too long and it continues to hurt Canadian and American families alike. Expanding this tariff action to even more forest products categories is deeply disappointing. Just two weeks ago, Congress passed the 21st Century Roa to Housing Act – a bipartisan package aimed at boosting U.S. housing supply by reducing regulatory barriers and helping communities build more homes. This trade action flies completely in the face of that effort. Tariffs on the very materials used to build homes, renovate properties and support North American construction supply chains will only make housing more expensive for American families. These actions will increase costs on our American neighbors, full stop.”
The Canadian Forest Sector Transformation Task Force, announced by the federal Minister of Energy and Natural Resources back in early 2026, recently released its final report. Their mandate was to promptly identify practical measures to transform and retool the sector. Their report outlines recommendations to stabilize the forest sector and also includes measures to diversify export markets, modernize operations, attract private investment, increase production of value-added wood products, and expand the use of wood in construction. Canada’s forests are the foundation of good jobs, affordable housing, and sustainable economic growth from coast to coast to coast. Today’s announcement and our ongoing work with provinces, territories, and indigenous groups will make sure that our government can support and stabilize the industry today while building a stronger tomorrow,” noted The Honorable Tim Hodgson, Minister of Energy and Natural Resources.
The Canadian Council of Forest Ministers (CCFM) will now review the report which will lead to the federal Government producing an Action plan which will serve as the foundation of Canada’s upcoming Forest Sector Strategy. In Canada, close federal provincial territorial co-operation is imperative, particularly when it comes to improving access to fiber, as the provinces own and manage nearly 90 percent of Canada’s forests.
Frederic Verrault, Executive Vice President, Chantiers Chibougamau is the Task Force Co-chair and Luc Theriault, President and Wood Products CEO, Domtar Canada is also a member of the Task Force. The Federal government wanted the group to provide advice on how to modernize the industry rather than extend another rescue plan, although the Feds did provide support for forest-dependent communities. In the longer term, co-chair Ken Kalesnikoff, principal and director, Kalesnikoff said the task force broke down its recommendations into measures to continue stabilizing the industry to 2030, then transform the industry by 2050. He said the task force did not discount the need for Canada to resolve its lumber trade war with the U.S., which has slapped 45 percent duties on imports from Canada. However, the push to promote the use of wood in construction is a measure that is in Canada’s control which holds potential. Increasing the domestic use of wood on that scale could take up to a quarter of the lumber typically exported to the U.S. which would “reduce the pain” of the lumber dispute, Kalesnikoff said.
FPAC welcomed the release of the Task Force report, its coordinated approach to bring stability, improve competitiveness and attract more investment to Canadian forestry. It also welcomed the message of moving from “advice to action.” Along with the release of the report, Natural Resources Minister Tim Hodgson made a number of announcements to strengthen the forest sector and prospects for forest sector employees. These included the enhancement of the Softwood Lumber Loan Guarantee Program and supports for Canadian workers, businesses and funding for over 50 projects that will help advance the sector’s transformation. “The Forest Sector Transformation Task Force has provided federal and provincial decision-makers with a thoughtful playbook. The 200,000 employees in our sector want to see that the federal government has their backs and is committed to real change to protect and grow jobs and investments into Canada’s forest industry,” said Derek Nighbor, President and CEO of FPAC. “This is the most robust federal government response we’ve seen in years to the core issues holding our industry back.”
What started as a very mild forest fire season has exploded into a terrible year, with evacuated communities, significant property loss, highway closures etc. At press time, active fires in northwestern Ontario numbered 110, with 46 in northeastern Ontario. Ontario First Nations leaders are calling for a public inquiry and significant reforms to the forest fire action taken by the province. Government ministers defended the provincial response and Natural Resources minister Mike Harris said their first concern is fighting existing fires and an annual “after-action” review will take place at the end of the season.
