Ontario Businesses Pursue New Markets Amid Tariff Uncertainty
As we end summer and head into fall, businesses pursue new markets for their products and services amid the continued war on tariffs. According to statistics both in Canada and the U.S., hardwood production was down for the first six months of the year.
Ash production is down due to the Emerald Ash Borer decimating trees in both Canada and the U.S., causing concerns in some mills of bringing in infested logs, thus limiting availability. With the implementation of tariffs, exports to China of kiln-dried Ash have also declined, whereas in the past few years it was a good market for this species. However, domestic and other export markets are keeping inventories lean and prices stable.
Contacts commented availability and demand of Aspen is low. Some mills temporarily stopped production. Kiln-dried Aspen is experiencing similar circumstances. Where green prices are down, they are in a slightly upward movement for kiln-dried products.
Basswood sales are slow as secondary manufacturers and distribution yards are not purchasing this species for the immediate future. Supplies are sufficient to meet anticipated lumber sales or finished goods production. This species has not been in great demand for some time, with small volumes flowing to green and kiln-dried markets. Prices have varied from low to firm depending on the item sought and its availability at the time.
With its special appearance and characteristics, Birch markets are nonetheless affected by market trends, particularly for whitewoods such as Hard and Soft Maple. Demand is not high, however, ample supply and softening prices of other whitewoods is affecting kiln-dried Birch pricing.
Sales of wood components and cabinets are sluggish, noted contacts, and so Hard Maple demand is down from these sectors as most have sufficient on hand supplies. Therefore, purchases are on an as-required basis. Sawmills cleared their Hard Maple log decks over summer and are now focused on other species like Red Oak. Green Hard Maple supplies are evidently not saturating the markets.
Contacts noted green Soft Maple is in better demand. The upper grades appear to be better stocked, while thicker stocks are somewhat lacking.
Demand for Red Oak is not strong as confirmed by several contacts, due to a slowdown in exports to China. With tariff wars going on, the Chinese are waiting for trade agreements to be finalized between them and the U.S. Thus, prices are under pressure. Due to these circumstances, exporters are being cautious with green Red Oak purchases.
Sawmills noted that White Oak is selling at a steady pace, both on domestic and international markets. Kiln-dried White Oak is readily being absorbed into these markets. Supplies are seen as adequate for specific items.
Oak strip flooring manufacturers confirmed business for solid wood flooring has improved. Red Oak flooring is doing better than White Oak flooring. This is seen as a shift over the past two years where White Oak was in the lead. Now demand for Red Oak flooring is the leader. This species in general is selling better than White Oak at this time. As in most areas, the tariff war is affecting sales of hardwood flooring. Manufacturers are creatively offering sales options to make the sale of their finished goods.
The concerns expressed earlier this year about lack of lumber supplies have dissipated as competition from truck trailer flooring manufacturers lessened, thus more raw material was available for residential flooring manufacturers.
Canada’s unemployment rate declined to 6.9 percent in June, the most recent data available at press time, while the economy added 83,000 jobs with most being part-time work. Economists had expected a rise to 7.1 percent.
The Canadian jobless rate has been climbing steadily this year since the start of the trade war, but June’s unemployment rate marks the first decline since January, said Statistics Canada in their July report. The unemployment rate peaked at 7 percent in May, the highest since 2016 outside of the pandemic.
Employment increased by 34,000 in retail and wholesale trade and by 17,000 in healthcare and social assistance. The manufacturing sector, impacted the most by trade uncertainty, also added jobs during the month. Private sector employment increased by 47,000 and the public sector increased by 23,000.
Statistics Canada said the layoff rate in June was unchanged from a year ago and remained low relative to historic averages outside of recessionary periods.
The June jobs numbers are the last look the Bank of Canada gets at the labor market ahead of its interest rate decision on July 30, as at time of writing. The central bank paused its policy rate in April and June, citing ongoing trade uncertainty with the U.S. and hotter-than-expected core inflation as the main reasons.
That uncertainty will likely persist, as President Trump threatened to impose a 35 percent tariff on Canadian goods starting on August 1. He also threatened a 50 percent tariff on copper, putting pressure on this Canadian industry. Prime Minister Carney said Canada will work towards the revised deadline of August 1 for a trade arrangement with the U.S. according to information collected before this press release.
The Bank of Canada governor Tiff Macklem said a trade deal between the U.S. and Canada remained “critical” for jobs and growth and warned consumer prices would likely rise if tariffs are not lifted.
