MNI INTERVIEW: Trump Tariffs Will Decimate Canadian Loggers
MNI (OTTAWA) - Canada's historic lumber industry faces more big mill shutdowns if Donald Trump moves ahead with 25% tariffs on all exports from north of the border, though there remains a chance for negotiations to prevent a disruption, Ontario Forest Association President Ian Dunn told MNI.
“I just got off the phone with a large forestry company and they said, if 25% tariffs do happen, they're shutting down. They cannot continue to operate,” Dunn said in an interview Thursday. The trade penalty "will have devastating impacts like for pulp and paper for panels that are exported across the border."
Trump's proposal would come on top of an existing softwood lumber duty of 14% that Dunn said is poised to rise to 30% next year. The softwood tariff has cost firms ten billion dollars.
Canada's lumber industry is already struggling with soft housing demand amid elevated interest rates, increasing operating costs and labor shortages, he said. Production capacity has already been taken offline, primarily in British Columbia, and Ontario has also seen reduced operating shifts and layoffs.
BARGAINING CHIPS
Uncertainty around trade policies has choked investment and productivity, shifting production not just to the U.S. but South America and Asia over the past two decades. Dunn said. Forestry employment in Ontario has dropped to 40,000 from 80,000 over that time.
It's unclear to Dunn if Trump's tariff threat is a bluff. Some experts have questioned whether Canada will ultimately be lumped in for trade penalties with Mexico and China. Trump's complaint is also border security around migrants and illegal drugs, things government figures show are far less prominent on the northern U.S. border. "It's hard to tell if it's going to come to fruition or if it's just at the beginning of a negotiation," Dunn said.
Canada's best bargaining chip is proving the benefits of trade rather than looking at retaliatory tariffs, he said. American tissue manufacturers, newsprint makers and home builders rely on Canadian forestry products, said Dunn, who recently testified at Parliament about tariffs.
"It is going to be very challenging but I do think there is a path forward on negotiations on some kind of settlement and a resolution," Dunn said. "Talking about the impact to American consumers, the cost of building new homes, the cost of renovations, all of this will continue to go up."
LOW RATE REVIVAL?
Forestry-- one of the staples of Canada's early economic development-- still has some chance to evolve, Dunn said. Firms are looking at repurposing by-products like lumber chips, sawdust and bark and using biomaterials or biofuels to create more valuable products, he said. The industry is also set to benefit from Ontario’s plan to build 1.5 million homes in coming years.
Canada's weaker dollar isn't a strong enough impulse to offset tariff damage, he said. Lumber prices remain weak because the bump from lower interest rates in the U.S. and Canada hasn't been visible yet, he said. “Amid easing interest rates and a stronger housing market in the U.S., people are pretty bullish on lumber in the longer term, mid to late 2025 going into 2026,” Dunn said.
Canada exported CAD39 billion of lumber and building materials to the U.S. in 2023 according to government figures. While that's well behind the auto and energy industries, it's still approaching 7% of total southbound exports with production scattered across much of the country.