Ontario Business Trends January 2026 – Strengthening The Forestry Sector And Budgeting For The New Year
With the holiday season behind us, and a new year begins, businesses are reviewing and taking stock of their business plans and developing new opportunities for the coming year despite the many challenges and uncertainty of global markets we are facing. As we are seeing, some businesses have amalgamated with others, to combine strategic plans and develop and strengthen new markets for their products or services. These joining of forces are being seen on both sides of the border, with more expected to happen this year.
As we start 2026, the hardwood sector faces continued challenges such as the ongoing imposed U.S. tariffs, global economic uncertainty, supply chain disruptions and finding and retaining skilled labor. It has been a busy year-end for Canada. Prime Minister Carney tabled his first “Budget 2025: Canada Strong,” which was approved in mid-November 2025. The budget adds $89.7 billion in net new spending over five years. It incorporates a projected $51.2 billion in savings over the same time from departments’ budget cuts and other government efficiency measures. It is directed at making Canada’s economy more attractive for investments with billions of dollars for infrastructure and new tax opportunities for business.
The country also continues to create new trade agreements and opportunities with other countries to counter the U.S. tariffs imposed around the globe. The Government of Canada (GC) also introduced several initiatives such as the Buy Canadian Policy to extend to infrastructure spending and other federal funding streams, ensuring that as much as $70 billion in additional public investment supports Canadian-made products and services. More of every public dollar will go into the Canadian economy, creating Canadian careers, using Canadian resources and benefitting Canadian communities.
It also introduced the Build Canada Homes, a new entity to leverage federal public lands, and a large portfolio of projects, highly competitive financing to help create scale in new factory-built housing industry that can help Canada build millions more affordable homes. This would cut building times by 50 percent, costs by 20 percent and lower emissions by a further 20 percent.
Following budget launch, the Hon. Tim Hodgson, minister of energy and natural resources, and the Hon. Stephen Fuhr, secretary of state (Defence Procurement), were in B.C. to highlight Budget 2025’s Buy Canadian Strategy and investments in Canada’s forest sector.
The GC is also investing $1.2 billion to strengthen the forest sector and softwood lumber industry transformation to remain competitive through measures that will help unlock its full potential while keeping pace with increased need for housing and major infrastructure construction. This includes up to $700 million over two years in loan guarantees administered by the Business Development Bank of Canada, to help forest companies maintain and restructure operations during a period of transformation. $500 million over three years, starting in 2026-27, to renew and expand Natural Resources Canada’s forest sector programs focused on market and product diversification and new export initiatives. The use of Canadian materials – including mass timber and softwood lumber – in construction and requiring government contractors to source domestically produced Canadian lumber will be prioritized.
Canada’s trade ministers signed a trade agreement in Yellowknife on November 19, 2025, to reduce red tape and knock down barriers across Canada’s 14 jurisdictions. The agreement took effect in December and applies to most products, excluding food, beverages, tobacco, plants and animals.
This initiative will help address global inflation, instability and chaos coming from the Trump administration, which provided Canadians with new urgency to tackle interprovincial trade barriers. It is based on a simple principle: if a good can be sold legally in one province or territory, it can be sold in another without extra rules or approvals. For businesses, they can now sell across Canada, save time and costs, have a bigger reach and grow and create new jobs, thus eliminating the need for them to navigate thousands of requirements across 14 jurisdictions.
The Canadian Federation of Independent Business said in a statement that it applauds the signing of the agreement, which it called a landmark achievement that will finally start breaking down costly internal trade barriers.
This is good news for small and medium-sized enterprises, as they gain easier access to new markets, while consumers will enjoy more choices and better prices.
According to the written announcement, economic analysis suggested mutual recognition could increase Canada’s GDP by up to 7.9 percent, unlocking as much as $200 billion annually and improving productivity by reducing regulatory delays and freeing resources for innovation and growth.
The agreement does not interfere with a government’s rights to regulate for health, safety and environmental protection. Businesses do not need to apply, as if a product meets the rules in one jurisdiction, it can be sold elsewhere unless an exception is listed.
The Ontario government also launched its “Buy Ontario Act, 2025”, to protect workers and businesses by prioritizing Ontario goods and services in public procurement, to counter U.S. tariff attack. It would be applicable to all public sector organizations, including municipalities, contractors and subcontractors that help deliver the province’s more than $220 billion plan to build using Ontario goods and services. It is meant to implement a Buy Ontario policy that prioritizes first Ontario and then Canadian goods and services, while still maintaining value for money for Ontario taxpayers and protecting procurement and major infrastructure projects from undue delays.
“Ontario’s more than $220 billion plan to build is the largest infrastructure plan in Canadian history, and we’re spending every dollar of that plan that we can right here in Ontario,” said Todd McCarthy, acting minister of infrastructure. “As we build the transit, highways, hospitals, homes and schools our growing province needs, we’re also helping keep hundreds of thousands of workers on the job in sectors like construction, steelmaking, forestry, agriculture, manufacturing and more.”
In cases where Ontario or Canadian goods and services cannot be procured at reasonable cost or timeframe to maintain value for taxpayers, the policy would continue to allow procurement outside of Canada.
However, the government will also take steps to shore up Ontario’s domestic capacity and ability to meet the province’s infrastructure and procurement needs to minimize the need to procure outside the province. It is also working to establish vendor lists of Ontario and Canadian suppliers to support their inclusion in provincial infrastructure and procurement processes, including contractors and subcontractors.
The year ahead will undoubtedly have its new challenges, but it is an opportunity for growth and prosperity. We wish you and yours a happy, healthy and prosperous New Year.
