Canadian forest sector faces another blow with new U.S. tariff onslaught

The Trump administration’s latest tariff onslaught won’t just hurt Canadian forestry workers during already tough times, but will also undermine U.S. efforts to make housing more affordable, says the head of the Forest Products Association of Canada.

“Overall for us, 98 tariff line items were added for forestry, which is a direct assault on our sector and on our workers here in Canada,” Derek Nighbor, president and CEO of the association, said in an interview Wednesday.

The U.S. government announced a plan late Monday to impose a 50 per cent tariff on hundreds of categories of Canadian goods, including several varieties of plywood, paper and other wood-derived products. The tariffs are slated to take effect on Aug. 19 and would be imposed using an obscure legal tool dating back to the Great Depression, Section 338 of the Tariff Act of 1930.

Many of the products targeted in Monday’s tariff announcement are closely linked to the U.S. homebuilding sector, Nighbor said. Canada is the third-biggest exporter of plywood to the United States, a $500-million business, and is the top supplier of fibreboard, accounting for another $400 million.

“People are either going to stop buying altogether because it’s too expensive or only those who are wealthy enough to buy will buy it,” Nighbor said of those goods.

“It just means lower housing activity in the U.S. and higher costs for Americans.”

The Canadian industry had already been dealing with long-standing duties on softwood lumber when, last year, an additional 10 per cent tariff was imposed on certain softwood lumber products using a different legal mechanism than the latest barrage. In that case, the U.S. invoked a law that allows tariffs to be imposed in the name of national security, Section 232 of the Trade Expansion Act of 1962.

On average, softwood lumber shipments going on to the U.S. now face a collective 45 per cent duty. The Canadian market share has dropped as a result, but Nighbor said the U.S. has few other options to fill the gap. U.S. homebuilders prefer wood from northern climates, which tends to be more durable and pliable, so they have been sourcing supply from Europe rather than domestically.

CIBC analysts wrote in a report that they understand lumber will not be subject to the new 50 per cent tariffs, but that a range of plywood, fibreboard, particleboard and veneered panel products will likely take a hit.

The rationale U.S. officials provided for the latest tariffs are provincial bans on U.S. alcohol, Canada’s supply managed dairy system and quotas on American cars, themselves retaliation for U.S. tariffs.

U.S. President Donald Trump said Tuesday that the newest duties announced are separate from his earlier threats stemming from Canadian wildfire smoke wafting south.

“Given President Trump’s recent complaints about Canadian wildfire smoke affecting the U.S., and the absence of any reference to that issue in the White House announcement, we see some risk that the administration could seek to raise Section 232 tariffs as a negotiating tactic in the future,” the CIBC analysts wrote.

The latest tariff move comes at a tough time for many Canadian forestry players.

“If implemented, these sweeping 50 per cent tariffs represent a drastic and unjustified barrier to a highly integrated North American supply chain,” said Ian Dunn, president and CEO of the Ontario Forest Industries Association.

northern Ontario is dealing with devastating wildfires. Early estimates suggest the flames have ravaged more of the province’s forests this season than any previous year on record, burning through more than 7,250 square kilometres so far.

“If the goal is to reduce wildfire, penalizing our industry achieves the opposite. U.S. trade barriers directly undermine our ability to continue actively and sustainably managing Ontario’s forests,” Dunn said.

In British Columbia, it’s also been a tough situation for the industry.

Earlier this month, Canfor Corp. announced the permanent closure of its Northwood pulp mill in Prince George, B.C., leading to the loss of 300 jobs. It said an oversupply in the global market has driven down pulp prices at the same time industry faces challenges accessing fibre.

Last year, three major timber operations closed in B.C.: the Crofton pulp mill, a West Fraser sawmill in 100 Mile House and a Drax pellet mill in Williams Lake.

The BC Council of Forest Industries counts 21 lumber mills that have closed permanently or indefinitely in the province since 2023.

The council “urges the Canadian and U.S. governments to work together on a fair, long-term solution that avoids further economic harm in both countries and supports a stable, predictable trading relationship,” said chief executive Kim Haakstad, who was in Washington on Wednesday for meetings with U.S. lawmakers.

This report by The Canadian Press was first published July 22, 2026.

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Lauren Krugel, The Canadian Press