Tariffs imposed on Canadian softwood lumber have surged to an alarming 45%, following a recent increase of 10% on conventional lumber and 25% on engineered wood products. Associate Professor Harry Nelson from the University of British Columbia“s Faculty of Forestry has indicated that this significant escalation propels British Columbia”s forestry sector into uncharted territory, endangering not only sawmills but also pulp and secondary manufacturing operations.
The ongoing dispute between Canada and the United States regarding softwood lumber has persisted for over four decades. The U.S. government asserts that Canada subsidizes lumber production through its stumpage system, which governs timber management on public lands. This practice, they argue, provides Canadian producers with an unfair competitive edge. However, both Canada and various trade panels have consistently dismissed these allegations, although they resurface periodically amid tariff cycles and negotiations.
In light of the current situation, B.C. Premier David Eby has characterized the circumstances as an existential crisis. When asked for his perspective, Nelson concurred, stating that the combination of such high tariffs alongside the aftermath of wildfires and beetle infestations constitutes a profound threat. To date, Canada has already paid the U.S. approximately $10 billion in lumber duties, and the likelihood of recovering much of that amount appears slim. Previously, the industry operated under the assumption that there were limits to U.S. pressures; however, this assumption has been shattered by the unprecedented scale of the tariffs.
Looking ahead, Nelson expressed concern over the potential for further mill curtailments and closures. He noted that companies are currently evaluating options ranging from curtailing operations to complete shutdowns. The fact that mills located near the U.S. border—among the most strategically positioned in B.C.—are experiencing downtime underscores the seriousness of the situation. Despite U.S. claims, they remain dependent on Canadian lumber supplies to meet their demands. The unpredictable element lies in the declining demand, which, if it continues to fall, will exacerbate pressure on producers.
The impact of these tariffs on secondary wood product industries is expected to be devastating. While the sawmill sector will face severe challenges, contractors and the pulp and paper industry will also suffer. These sectors are closely interconnected, as sawmills provide pulp mills with lower-value fiber. The closure of sawmills would result in adverse effects rippling through the entire ecosystem, affecting everyone from contractors to pulp and paper manufacturers.
Over the next six months, Nelson anticipates more mill closures and significant repercussions for communities reliant on forestry. He emphasizes the need for rapid governmental action to support not just the mills, but also contractors and related services. Unlike large manufacturers, these smaller businesses often lack adequate financial buffers, and the existing federal loan guarantee program may prove insufficient. Targeted measures are essential to assist rural communities and contractors who have limited options, along with long-term strategies aimed at fostering resilience within the sector.
In terms of future forestry management in B.C., Nelson argues that the region has become overly reliant on the U.S. market. For sustainable growth, a more diversified approach is necessary to mitigate vulnerability to market fluctuations. B.C. possesses a skilled workforce, substantial expertise, and robust infrastructure combined with abundant forest resources that can support a sustainable forestry sector. The newly formed Provincial Forest Advisory Council is currently investigating reforms to promote innovation, diversification, and resilience. The challenge lies in developing a sector capable of withstanding economic and ecological changes while simultaneously supporting rural communities. This necessitates a reevaluation of forest management practices, value addition, and support for innovation.
