Lumber Wars: The 4-1-1 on Canadian Wood

As Canada continues to battle with the United States (U.S.) over tariffs, another natural resource has come into the spotlight amidst the trade war: lumber.

Canadian lumber is now the subject of tariffs due to allegations from the U.S. government that Canada’s lumber industry receives “unfair” benefits that the U.S. does not receive with their lumber industry. The impacts of changing American attitudes towards Canadian lumber have financial implications for Canadians in the billions of dollars.

What Are These Tariffs About?

The core reason for this international trade dispute is due to how lumber is harvested and priced in Canada. The Canadian lumber industry has faced allegations from the U.S. government that it benefits from stumpage fees, payments that firms make to harvest timber on publicly owned (Crown) land.

Meanwhile, in the U.S., most timber is harvested on privately-owned land, with prices dictated by the free market. These stumpage fees are often lower than market-based fees, which the U.S. government and other critics of Canada’s lumber industry consider a government subsidy.

The U.S. relies significantly on Canadian softwood lumber exports, with Canada being the primary supplier of softwood lumber products imported by the U.S. and Canadian lumber accounting for approximately 30% of the U.S. softwood lumber supply.

As of August 2025, the current U.S. tariff rate of Canadian softwood lumber is 35.19% for most Canadian companies in the softwood lumber industry.

This tariff rate includes both anti-dumping and countervailing duties. The countervailing tariffs target Canada’s stumpage fees that are lower than U.S. lumber market fees, while the anti-dumping duties penalize Canadian lumber products sold below market value in the U.S.

However, these combined tariffs are higher for companies such as Canfor and West Fraser Mills Ltd (47.65% and 26.47%, respectively) and these tariffs are being applied retroactively, meaning that softwood lumber companies owe back payments on shipments sent to the U.S. starting from 2023.

Tariffs’ Impact on Canada and the U.S.

The retroactive softwood lumber tariffs will be detrimental to both Canada and the U.S..

For Canada, the economic losses for Canadian lumber exporters are massive. These high tariffs are a huge financial strain on forestry companies. This strain will reduce industry investments, accelerate job losses, and curb industrial capacity, especially in rural communities that disproportionately rely on this industry.

One study estimated that tariffs cost Canadian lumber producers US$5.6 billion from 2017 to 2021, with an additional economic loss of US$3 billion by 2027.

While these tariffs have detrimental impacts on the Canadian economy, the U.S. is not benefitting as expected from proponents of these tariffs. The U.S. needs Canadian softwood lumber for a significant portion of its housing construction.

Because of these tariffs, American house-building companies will experience a surge in construction costs due to the tariffs on softwood lumber, an essential resource used for building homes. These effects will make home ownership for American families more out of reach in an increasingly expensive housing market.

BC’s Lumber Industry: Caught in the Crossfire

British Columbia (BC)’s softwood lumber industry will face disproportionate impacts compared to other provinces, especially considering that 65% of B.C.’s softwood lumber production is exported to the U.S. and that 54% of all Canadian softwood lumber export revenue comes from B.C.

These tariffs will further accelerate job losses in the BC forestry sector, which have exceeded 40,000 since the early 1990s. These jobs are essential to the livelihoods of residents in rural and Indigenous communities across BC.

The repeated surge in tariffs and trade uncertainty threaten to dismantle an industry essential to rural infrastructure in the province, making it harder for younger Canadians to find reliable employment as economic opportunities in this industry disappear.

How is the Canadian Government Responding?

After months of pressure from a coalition of industry leaders and government officials from communities heavily dependent on forestry, the Canadian government announced that it will provide $1.2 billion in financial support for the softwood lumber industry.

Of this $1.2 billion, $700 million would be available in loan guarantees for forestry companies, and $500 million in grants and contributions would be used to spur product development and market diversification to help retrain lumber workers. In addition to this support, $50 million will be directed towards reskilling and income support for over 6,000 affected workers in the lumber sector.

While this financial package will provide economic relief to softwood lumber exporters and workers, the economic losses of the current tariffs may escalate if the tariffs continue to increase.

*This blog was written in August 2025. For up-to-date industry news and perspectives, make sure to subscribe to YCR’s newsletter and follow us on social media!*