Ontario Business Trends June 2025 – Amid Tariff Conflicts, Some Seek Alternative Markets Away From U.S.
March and April were eventful months dominated by the federal election on April 28, an unpredictable race between the Liberal and Conservative parties, at the time of this writing. Meanwhile, ongoing tariff conflicts between Canada and the U.S. created uncertainty, affecting businesses across the hardwood industry as well as most businesses in other sectors. Tariff retaliations by other countries with the U.S. also affected businesses here. Companies in the hardwood industry were adopting a wait and see attitude on how tariffs played out, scaling back investment plans due to increased uncertainty, and they were seeking alternative markets beyond the U.S.
As the tariffs and retaliatory tariffs changed daily and sometimes hourly, it disrupted global trade and financial markets. The U.S.-China trade war eliminated sales of Red Oak, Cherry and Ash between both countries. Chinese secondary manufacturers switched from White Oak to Northern Red Oak purchasing to save on costs, and explored alternative supply sources, including Canadian producers for these species. As the trade war continues, it remains to be seen if Chinese purchasers will turn to Canada to provide these species.
“The dramatic protectionist shift in U.S. trade policy and the chaotic delivery have increased uncertainty, roiled financial markets, diminished global growth prospects and raised inflation expectations,”
said Governor Macklem at a press conference.
Ash production continues despite limited availability and reduced lumber output due to log exports. With tariffs being imposed, we should soon see their impacts on Ash and all other species. There is more cross border trading of Ash between the eastern U.S. border states and Ontario, Quebec and Maritime provinces.
Aspen supplies remain low, thus driving price increases, while kiln-dried Aspen sales have improved, noted contacts, with inventories thin for No. 1 Common and Better. Basswood inventories are adequate, although production is being controlled, and kiln-dried inventories are thin, pushing prices upward.
Birch supplies are meeting buyers’ needs with stable pricing. Some mills processed more green Birch these past few months, with markets absorbing output. In some areas, it was noted there were “ample supplies” for this species.
Secondary manufacturers and wholesalers increased their on-hand supplies of Hard Maple. Kiln-dried demand for No. 1 Common and Better is doing well. Soft Maple business is doing well and remains steady, commented contacts.
In mid-April, Ontario Premier Doug Ford introduced the “Protect Ontario through Free Trade within Canada Act” to remove trade barriers among all provinces and territories. If approved, it would eliminate Ontario’s remaining exceptions under the Canadian Free Trade Agreement, facilitate labor mobility, promote economic growth, create jobs, reduce red tape and duplication, and encourage interprovincial trade.
Ford announced Ontario signed two MOUs, one with the province of Nova Scotia, and the other with the province of New Brunswick. He stated tariffs reduce our national GDP by more than 7 percent, and cost our economy up to $200 billion each year. This hurts our economy, drives away jobs and investment and divides us from each other.
The signed memorandums of understanding (MOU)s with Nova Scotia and New Brunswick serve as blueprints for broader free trade within Canada. The initiative is a step toward a more united and competitive national economy through all provinces and territories, and working together with the federal government to achieve this.
On the financial front, the Bank of Canada left its key interest rate unchanged on April 16, at 2.75 percent, after seven consecutive cuts, citing ongoing uncertainty caused by U.S. protectionist policies and tariffs, which disrupted financial markets and affected Canadian business confidence. Bank of Canada Governor Tiff Macklem highlighted the unpredictable nature of the trade dispute, which could lead to either minimal economic impact or a prolonged recession for Canada.
“The dramatic protectionist shift in U.S. trade policy and the chaotic delivery have increased uncertainty, roiled financial markets, diminished global growth prospects and raised inflation expectations,” said Governor Macklem at a press conference.
Despite potential justifications for further cuts, the central bank opted for caution—a pause, waiting for more clarity on how the trade dispute will unfold as the future remains unclear, fluctuating tariff impositions, reductions, or escalations are unpredictable, and their duration is unknown. Early tariff effects have weakened business and consumer confidence, causing adjustments to financial plans. Some manufacturers reduced workforces.
Everyone is waiting to see the outcome and the changes that will result from these changing tariffs.
