Ontario Business Trends February 2026 – New Markets May Provide Canadian Solutions
As we move into 2026, and with continued tariffs, hardwood businesses pursue their plans to seek new markets for their products. The Government of Canada has provided some assistance to businesses to ease the imposed U.S. tariff burdens. At the time of this writing, Canada was preparing to reopen trade discussions with the U.S.
Ash demand to export markets improved slightly, particularly to China and Europe. Wholesalers are working at bolstering green Ash receipts. The limited supplies are driving price gains.
Demand for Aspen is not great at this time. Secondary manufacturers are not demanding this species to produce finished goods, both on domestic and international markets. Those that produce Aspen report sales are from long-standing clients, although in lesser quantities. It was noted that some sawmills and drying operations were not producing it due to market contraction.
Basswood demand is stable although at lower levels at this time. Domestic markets are faring better than export markets, although some contacts reported the opposite. Some sawmills are controlling Birch production where possible, but are still responding to their clients’ needs. Some secondary manufacturers reduced their purchases at year-end 2025 to manage inventory. It was noted that upper grades in longer lengths were obtaining higher prices than shorter length materials. Green and kiln-dried prices varied based on length and color selection.
Conditions for Hard Maple improved slightly depending on regions contacted, with prices stabilizing. Sales were based on specified lengths for upper grades, thus prices rose. The common grade sales are reported as favorable, with some contacts advising they were closely watching extra stock on hand. Green Hard Maple appears to be moving steadily.
Soft Maple, noted contacts, is moving at a decent rate. Sawmills are receiving inquiries and orders for green supplies. Bestsellers are the No. 1 Common and Better grades, although No. 2A is doing well. Inventories were depleted due to steady sales and limited production.
Red Oak exports are down, especially to China compared to a year ago. Demand on domestic markets for kiln-dried Red Oak is faring better. Markets for green Red Oak were slower in late 2025 and early 2026. Particularly for the truck trailer flooring sector.
White Oak sales are a mixed bag, note contacts. Some items are selling very well, while others are not. Longer kiln-dried lengths sell better than shorter lengths. Depending on areas contacted, No. 1 Common is a slow seller for some, while steady for others. Kiln-dried No. 2A is drawing interest as well.
For many flooring plants, the 2025 holiday season was a time for some employees to take vacations, to take stock of year-end inventories, perform equipment maintenance, and plan for new projects. Inventories were described as manageable, although some finished goods inventories were said to have risen, but were expected to go down following the Holiday break.
To counter unjust tariffs, the Government of Canada has taken strong action to support workers and drive transformation in the forest sector, which is vital to communities across the country and to deliver affordable housing through innovative wood products and technologies—part of the government’s new strategy through the Build Canada Homes and Buy Canadian Policy.
Prime Minister Mark Carney announced new federal measures to strengthen the lumber sector, including a 50 percent cut to interprovincial rail freight rates for lumber beginning this spring and directing the Build Canada Homes (BCH) agency to prioritize projects that can start within a year and use Canadian wood products. The Buy Canadian Policy, launched in December 2025, requires federal contracts over $25 million to prioritize Canadian materials including lumber and steel.
The Hon. Tim Hodgson, Minister of Energy and Natural Resources (NRCan), highlighted progress on federal support measures and announced a new single-window pathfinding service, funding to expand the use of Canadian wood in construction, and the creation of the Canadian Forest Sector Transformation Task Force.
The single-window service provides a centralized website and direct access to NRCan experts, simplifying navigation of all federal programs on eligibility and program applications for forest sector businesses and workers.
Through NRCan’s Green Construction through Wood (GCWood) program, Canada is investing over $9 million to accelerate the adoption of innovative Canadian wood products like mass timber, in construction projects nationwide. Initiatives include: addressing insurance barriers; creating a Mass Timber Costing Guide; advancing code changes for low-carbon materials; expanding wood construction education; and, increasing the use of wood-based solutions through technical support and training. These projects and initiatives will boost innovation and market confidence, and foster sustainable and affordable building practices.
The Minister also launched the Canadian Forest Sector Transformation Task Force, launching in early 2026, will seek input from industry, provinces and territories, Indigenous foresters, communities, and labor groups on how to restructure the forest sector to ensure long-term competitiveness. Led by Ken Kalesnikoff, Kalesnikoff Mass Timber, and Frédéric Verreault, Les Chantiers Chibougamau, it will have 90 days to seek recommendations on best practices to expand the use of modern construction methods (including mass timber and modular systems), diversify products, identify new markets, and enhance productivity. At the time of this writing, additional Task Force members were expected to be named by early January 2026.
Since August 2025, the government has introduced over $2.35 billion in measures to ensure Canada’s forest sector remains competitive, sustainable and resilient.
The EU Deforestation Regulation (EUDR) introduced on June 29, 2023, requires companies importing, exporting, manufacturing, or trading relevant products in the EU to prove their sourcing did not contribute to deforestation or illegal sourcing practices. Its application has been delayed to December 30, 2026.
In December 2025, the Council of the European Union adopted a targeted revision of the EUDR, to make implementation more manageable for operators, traders and authorities. The revision confirms the new application date, adding a six-month transition period for micro and small operators. The changes address concerns about administrative burden and IT system readiness necessary for the effective EUDR functioning, while maintaining the environmental objectives.
Books, newspapers, and printed pictures were removed from the regulation, due to their low deforestation risk.
The revision also requires the European Commission to conduct a simplification review and report by April 30, 2026, assessing the regulation’s impact, especially on smaller operators, and propose legislative changes if needed.
Once formally adopted, the revised regulation will be published in the Official Journal of the EU and take effect three days after publication.
