Ontario/Quebec Business Trends
Anti-Dumping Duties, Countervailing Duties And Tariffs Cause Concern
By Richard Lipman
Guest Writer
Natural Resources Canada price data shows eastern Spruce-Pine-Fir (SPF) 2 x 4 current and four-week average prices at $565 Cdn. and the 52-week average at $594. There was little celebration at the news that the U.S. Deparment of Commerce is suggesting it might reduce duty rates for most Canadian softwood producers. Canadian manufacturers would still need to pay significant levies of 34.83 percent. U.S. import taxes on lumber are 45.16 percent presently on most Canadian producers, including the combined countervailing and anti-dumping duties of 35.16 percent and tariffs of 10 percent.
The Department of Commerce expects to decrease anti-dumping duty rates to 10.66 percent from 20.53 percent. Most Canadian producers also face paying 14.17 percent for countervailing duties, down slightly from 14.63 percent. The revised anti-dumping and countervailing duties equal 24.83 percent and when combined with the tariffs, levies total 34.83 percent. The new rates are intended to start by late summer 2026, subject to further revisions in a final determination. One association executive said, “These duties continue to make it more expensive to build homes at a time when both countries should be working together to improve housing affordability.”
The Ontario government issued a statement in response to this preliminary indication from the U.S. Department of Commerce suggesting that softwood lumber duties may decrease from the current rate later this year. It noted, “Ontario’s forest sector has a global reputation as a leader in the G7 in the production of high-quality wood and wood products. People and businesses in Canada and the U.S. alike rely on Ontario-made softwood lumber to build homes and critical community infrastructure. While this preliminary indication suggests some relief for softwood lumber producers later in the year, Ontario remains firm that duties are unwarranted and not supported by evidence. Ontario continues to call for the full removal of all duties that raise costs for both American and Canadian families. These ongoing duties and tariffs reduce productivity, disrupt supply chains, drive up the cost of construction and make housing less affordable. Trade and cooperation make our two countries stronger, safer and more prosperous. Ontario urges the U.S. to work with Canada on a fair and long-term resolution in support of workers, families and businesses on both sides of the border.”
The eastern lumber industry gathered for the Montreal Wood Convention recently. One of the keynote speakers of interest to participants was Paul F. Jannke, a Principal of the Forest Economic Advisors LLC, who spoke on global lumber markets. In addressing U.S. duties and tariffs, he noted that Canadian lumber suppliers are facing a significant disadvantage, when competing with European wood products for U.S. market share, since European producers face lower tariffs. “There’s a big competitive advantage there and provides some impetus for a reason to potentially get a solution to the trade dispute between U.S. and Canada.”
While there has been lots of encouragement for Canadian producers to expand their wood products export markets, expanding outside of North America will face stiff competition, despite lumber availability from Europe expected to decrease significantly in the long-term. He said Canada will face fierce competition from Russia, but also from the southern U.S., due to the excess supply of lumber and low production costs. He felt there were only three major places where Canada could export its wood, the U.S., China and Europe, and that the U.S. is not expected to have much growth in 2026, with the war being an important influence on what transpires this year.
Regarding China, he felt there was really not a lot of room, or not much growth there at all. He also mentioned India, which he said consumes barely any wood. He called it “an exciting and growing market,” saying there is “an increasing demand there, but it is still a very, very small market.” His conclusion was that Canadian producers need to keep their market share in the states and noted that the lower cost Canadian regions can compete with U.S. domestic producers. He stated that, “U.S. homebuilders largely continue to ask for SPF for their framing applications, despite higher costs for it.”
Labor and fiber supply, as well as transportation and energy costs, may affect production levels and margins.
GreenFirst Forest Products Inc. recently announced its financial results for the fourth quarter of 2025, and as part of the announcement, the company provided some valuable background, including an Outlook for the North American lumber industry, which it says reflects ongoing macroeconomic uncertainty, but long-term demand fundamentals remain supportive. They indicated lumber demand is closely tied to residential construction activity in the U.S. Inflationary pressures have moderated and interest rates may gradually ease.
However, housing affordability challenges and broader economic uncertainty continue to weigh on near-term activity. As a result, demand for lumber products may remain below mid-cycle levels. Still, improving financial conditions could support a gradual recovery in residential construction, repair and renovation activity over time.
GreenFirst noted that on the supply side, the North American lumber industry faces structural pressures related to timber availability, regulatory harvest limits and wildfire impacts, particularly in Western Canada and the Province of Quebec. These factors have contributed to permanent mill closures, production curtailments and reduced harvesting levels across parts of the industry.
They identified that fiber supply conditions vary by regions, but that certain jurisdictions, including Ontario where they operate, continues to maintain a relatively stable timber availability. Labor availability, transportation constraints, energy costs and inflationary pressures continue to influence operating costs across the forestry sector. These factors, combined with tight fiber supply in certain regions, may affect production levels and margins.
At the same time, ongoing investments in mill modernization, automation and process optimization are enabling producers to improve operating efficiency and enhance long-term competitiveness.
The Ontario government tabled its budget recently, with a focus on developing a resilient economy amid geopolitical uncertainty. The budget offers housing start projections for 2026 of 64,800 units, down about 10,000 units from what was forecast in the 2025 budget. The government has said its plan to temporarily expand HST rebates on the purchase of town homes, announced ahead of the budget, will spark an additional 8,000 housing starts. Ontario has been steadily lowering projections for new home construction levels, with the finance minister conceding last year that the government’s goal of building 1.5 million homes in 10 years has become a “soft target.”
Ontario’s government is also protecting workers by expanding employment supports and training for workers impacted by tariffs and global trade disruptions. Over the next three years, through a $228.8 million investment from the Government of Canada, Ontario will deliver the Canada-Ontario Workforce Tariff Response, helping up to 27,000 Ontario workers retain, upgrade their skills and stay competitive in key sectors of the economy, including softwood lumber.
According to the President of the Ontario Professional Foresters Association, “The Canada Ontario Workforce Tariff Response Initiative will provide support to workers and industries affected by softwood lumber tariffs and help to stabilize sectors that are vital to Ontario’s economy. By strengthening workforce skills and professional development, this program will contribute a resilient, knowledgeable and future ready forestry profession across the province.”
The Canadian government recently announced that it is suspending the federal Fuel Excise Tax on gasoline and diesel. This is a temporary measure, from April 20 to September 7, 2026, and will reduce regular gas by 10 cents per liter and four cents on diesel. This will help lower the operating costs for truckers. Canada Mortgage and Housing Corp. (CMHC) reported that housing starts in Canada are set to decline over the next three years, due to higher construction costs, weaker demand and elevated levels of unsold inventory. This forecast signifies another blow for the country’s real-estate sector, where prices and sales have declined following a prolonged period of strength fueled by immigration. It also shows that housing–market activity will not help launch the Canadian economy into a higher gear. CMHC indicated that Canada’s economy is struggling with slow growth, with manufacturers under duress from hefty U.S. tariffs.
In addition, firms are scaling back spending and hiring plans as the future of the North American trade agreement is in doubt. An economist at National Bank Financial recently said that “the federal government might have to step up and help spur Canadian home building, due to conditions that point to a sharp slowdown. He said efforts to cap population growth, via limits on immigration, have helped improve housing affordability, which might lead to a slowdown in home building due to softer demand. The benchmark interest rate was held steady by the Bank of Canada, as it waited to see whether global oil prices caused by the Middle East war become a wider inflation issue. While inflation was even below the central bank’s two percent target for February, the energy price surge will almost certainly push inflation higher in the coming months. In their announcement they also noted that the “added layers of U.S. trade uncertainty and ongoing geopolitical tensions means risks are tilted towards weaker growth. The upcoming review of the Canada-U.S.-Mexico trade agreement is still a big unknown.”
