Ninety-eight forest product lines land on Washington’s new 50 percent tariff list, striking plywood, fibreboard and paper as Canadian mills close and wildfires rage. Industry leaders warn the levies will also raise the cost of American homes.
Peacock Tariff Consulting, Canada Trade Desk. Dateline Ottawa, July 23, 2026.
OTTAWA. Canada’s beleaguered forest products sector absorbed another heavy blow this week, as the United States folded dozens of wood-derived goods into a sweeping new 50 percent tariff that industry leaders described as a direct assault on an already fragile industry. The measure, announced late on July 20 and set to take effect August 19, arrives as Canadian mills shut down, as wildfires tear through northern forests, and as producers warn that the duties will ultimately make housing less affordable for the American families they are meant to protect.
The tariffs were imposed under Section 338 of the Tariff Act of 1930, an obscure Depression-era provision that allows the president to levy duties of up to 50 percent on goods from a country deemed to discriminate against U.S. commerce. While the broad action targets close to US$20 billion of Canadian imports across many industries, the forestry file drew particular alarm because of how many product categories were swept in and how weakened the sector already was heading into the announcement.
“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 chief executive of the Forest Products Association of Canada, said in an interview. His organization represents many of the country’s largest wood, pulp and paper producers, and his reaction captured an industry that feels it is being squeezed from several directions at once.
What the tariffs cover
The new duties apply to several varieties of plywood, paper and other wood-derived products, according to the association and to analysts tracking the measure. Many of the targeted goods are closely tied to the U.S. homebuilding sector. Nighbor noted that Canada is the third-largest exporter of plywood to the United States, a business worth about US$500 million, and the top supplier of fibreboard, accounting for roughly another US$400 million. Those are not niche shipments. They are structural inputs that flow into American homes, furniture and renovation projects every day.
Analysts at CIBC wrote in a report that they understood softwood lumber itself would not be subject to the new 50 percent tariffs, but that a range of plywood, fibreboard, particleboard and veneered panel products would likely take a hit. That distinction matters. Softwood lumber, the raw commodity at the heart of the decades-old Canada-U.S. trade dispute, sits under a separate legal track, while the newly targeted products are the more finished panels and boards that builders and manufacturers rely on.
The rationale U.S. officials offered for the broader tariff package did not center on forestry at all. Washington cited provincial bans on American alcohol, Canada’s supply-managed dairy system, and quotas on certain American vehicles as the discriminatory practices justifying the action, grievances that themselves stem in part from Canadian retaliation against earlier U.S. tariffs. Forestry, in other words, was caught in a dispute driven by cars, cheese and liquor, a point that has left industry leaders frustrated at being collateral damage.
An industry already under strain
The timing could hardly be worse. The Canadian forest products industry had already been contending with long-standing duties on softwood lumber when, last year, an additional 10 percent tariff was placed on certain softwood lumber products through a different legal mechanism, Section 232 of the Trade Expansion Act of 1962, which allows tariffs in the name of national security. On average, softwood lumber shipments bound for the United States now face a collective duty of about 45 percent, a level that has already eroded Canada’s share of that market.
Nighbor argued that the United States has few good alternatives to Canadian wood even as it raises the cost of importing it. American homebuilders tend to prefer lumber from northern climates, which grows more slowly and tends to be more durable and pliable, and as Canadian market share has fallen, buyers have turned to Europe rather than to domestic supply. “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,” he said of the affected goods. “It just means lower housing activity in the U.S. and higher costs for Americans.”
Decades of softwood friction
The forestry dispute predates the current trade war by a generation. The disagreement over softwood lumber ranks among the longest-running trade conflicts between the two countries, stretching back more than four decades. At its core is a dispute over how Canadian timber is priced. Most Canadian logs are harvested from public land, with provinces setting stumpage fees, while American timber is largely cut from private land at market prices. U.S. producers have repeatedly argued that the Canadian system amounts to a subsidy, prompting successive rounds of countervailing and antidumping duties, and Canada has just as consistently rejected that claim, often prevailing before international trade panels.
Those cyclical battles have periodically been calmed by negotiated agreements, only to flare again when the deals lapse. The current combined duty of roughly 45 percent on softwood shipments is the product of that long history, layered with newer measures. For Canadian producers, the pattern has meant living with chronic uncertainty, building duty costs into their business models, and watching their share of the U.S. market ebb and flow with each legal ruling. The latest tariffs on plywood, fibreboard and panels open a new chapter in an old story, extending the friction from raw lumber into the more finished wood products that had, until now, largely escaped the worst of it.
A tangle of overlapping tariffs
Part of what makes the current moment so difficult for the sector is the number of distinct tariff regimes now bearing on wood products at once. The long-standing antidumping and countervailing duties on softwood lumber sit on one track. A separate Section 232 national-security action, launched in 2025, added a 10 percent tariff on imports of timber and softwood lumber, according to trade advisers tracking the measures, with higher rates reported on certain finished goods such as upholstered furniture and kitchen cabinets, and scheduled increases into 2027. The new Section 338 duties form yet a third layer, aimed at plywood, fibreboard, particleboard and veneered panels.
Producers also face a looming procedural milestone. Duty rates under the antidumping and countervailing track will not change until the U.S. Department of Commerce issues its final determination in that proceeding, which trade analysts expect as early as August 2026, the same month the new 50 percent tariffs are due to take effect. The convergence of a possible duty adjustment and a fresh tariff in the same window means Canadian forestry companies could see their effective cost of selling into the United States shift markedly within a matter of weeks, complicating pricing, contracts and production planning at mills already operating on thin margins.
The domestic picture is grim. In British Columbia, the industry has been battered by mill closures. Earlier this month, Canfor Corp. announced the permanent closure of its Northwood pulp mill in Prince George, a shutdown that will cost about 300 jobs, citing an oversupply in the global market that has driven down pulp prices at the same time producers struggle to access fibre. Last year, three major timber operations closed in the province, including 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.
Fire and smoke complicate the picture
Adding to the strain, northern Ontario is enduring a devastating wildfire season. Early estimates suggest the flames have burned through more of the province’s forests this year than in any previous season on record, scorching more than 7,250 square kilometres so far. Industry leaders argue that a healthy, actively managed forest sector is part of the solution to wildfire risk, not a contributor to it, and that penalizing the industry undercuts that work.
“If implemented, these sweeping 50 percent tariffs represent a drastic and unjustified barrier to a highly integrated North American supply chain,” said Ian Dunn, president and chief executive of the Ontario Forest Industries Association. “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.” His argument links two files that Washington has at times treated together, since Trump has separately complained about Canadian wildfire smoke drifting into the United States and floated additional measures in response.
That linkage worries analysts. Trump said the newest duties are separate from his earlier threats tied to wildfire smoke, but the CIBC team cautioned that the absence of any wildfire reference in the White House announcement leaves open the risk that the administration could seek to raise Section 232 tariffs on wood products later as a negotiating tactic. For an industry already navigating multiple overlapping tariff regimes, that uncertainty is itself a cost, complicating investment and hiring decisions.
Reactions and appeals for a deal
Industry groups responded with a mix of alarm and calls for negotiation. Kim Haakstad, chief executive of the BC Council of Forest Industries, was in Washington on the day the reaction unfolded, meeting with U.S. lawmakers. Her council, she said, “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.” The message reflected a sector that wants resolution more than escalation, mindful that its customers and its competitors both sit largely inside the United States.
Ottawa has placed forestry among the priorities it wants addressed in talks with Washington. The minister responsible for Canada-U.S. trade has named softwood lumber alongside steel, aluminum and autos as sectors Canada wants resolved, carrying that demand into the CUSMA joint review process. For forestry workers and mill towns, the political question is whether the file can command enough attention in a negotiation crowded with higher-profile disputes over automobiles and dairy.
The homebuilding connection
The tariffs’ reach into American homebuilding is central to the industry’s argument against them. Plywood and fibreboard are not luxury imports. They are workaday materials used in framing, sheathing, flooring, cabinetry and furniture. When the cost of those inputs rises, the increase tends to flow through to the price of new homes and renovations at a time when housing affordability is already a pressing concern in the United States. Industry leaders contend that this makes the tariffs self-defeating, raising costs for American consumers in pursuit of leverage over grievances that have nothing to do with wood.
The substitution problem compounds the effect. American builders have historically favoured wood from northern climates, which grows more slowly and yields denser, more durable and more pliable material than faster-growing southern alternatives. As Canadian market share has fallen under existing duties, U.S. buyers have often turned to European suppliers rather than to domestic mills, meaning the tariffs may shift trade flows across the Atlantic rather than reshore production to the United States. That dynamic undercuts the premise that duties on Canadian wood will rebuild American manufacturing, and it helps explain why segments of the U.S. homebuilding industry have quietly opposed the measures.
Economic impact
The economic stakes cut both ways across the border. On the Canadian side, a 50 percent tariff on plywood, fibreboard and related panels threatens roughly US$900 million in combined plywood and fibreboard trade alone, on top of the softwood duties already dragging on the sector. Communities dependent on mills, many of them in British Columbia, Ontario and Quebec, face compounding pressure from weak commodity prices, constrained fibre supply, wildfire disruption and now a steep new border tax on finished wood products.
Employment is the sharpest edge of the economic story. The permanent closure of Canfor’s Northwood pulp mill alone will eliminate about 300 jobs in Prince George, and it follows a string of shutdowns that has left mill towns across British Columbia, and increasingly in Ontario and Quebec, grappling with lost payrolls, shrinking tax bases and uncertain futures. Forestry jobs are often concentrated in smaller communities where a single mill can anchor the local economy, which means that even a modest national output effect can translate into severe, localized hardship. Layering a 50 percent tariff on top of weak commodity prices and constrained fibre supply raises the risk of further closures, and with them a deeper erosion of the skilled workforce the industry will need if trade conditions eventually improve.
Pulp, paper and a global glut
The tariffs also strike a pulp and paper segment already contending with a global oversupply. Canfor’s decision to close its Northwood mill was driven, the company said, by an oversupply in the global market that has pushed down pulp prices at the same time producers struggle to secure fibre. Adding several categories of paper products to a 50 percent tariff list compounds that pressure, narrowing the margins on shipments to the United States and pushing some producers closer to the decision point on whether marginal operations remain viable.
Fibre access has become a structural constraint for the sector. Years of wildfire, pest infestation and shifting land-use decisions have tightened the supply of timber available to Canadian mills, raising input costs even before trade barriers are considered. When reduced fibre availability meets weak commodity prices and a steep new tariff, the arithmetic for keeping older, higher-cost mills running becomes difficult, which is why industry leaders frame the latest duties not as an isolated shock but as one more weight on an already strained system.
On the American side, the tariffs collide with an affordability problem. Wood panels are basic inputs to homebuilding and renovation, and a 50 percent duty on a major source of supply tends to push prices up for builders and, ultimately, buyers. With U.S. housing costs already a political flashpoint, the industry’s warning that the measure will mean lower housing activity and higher costs for Americans is likely to feature in the domestic debate over the tariffs. The economic logic that duties will simply shift production to American mills is complicated by the reality that U.S. buyers have often turned to Europe, not domestic suppliers, to replace Canadian wood.
Implications for importers, exporters and businesses
For Canadian forestry exporters, the immediate task is to map exposure across the 98 affected line items and determine precisely which products fall under the new duties, which remain under the separate softwood and Section 232 regimes, and which are exempt. The overlapping tariff structures make classification unusually complex, and errors could be expensive. Producers with diversified product lines may be able to tilt toward categories that escape the new levies, while those concentrated in plywood, fibreboard and panels have less room to maneuver.
American importers of Canadian wood panels, who bear the legal burden of the tariff, are likely to accelerate purchases before August 19, seek shared cost arrangements with Canadian suppliers, and explore European and domestic alternatives despite their higher cost or lower suitability. Homebuilders and furniture manufacturers that rely on Canadian fibreboard and plywood should model the impact on input costs now and revisit supply contracts to clarify who absorbs the duty.
There may also be avenues for formal challenge and relief. Canada has historically contested U.S. wood duties through dispute-settlement panels, and Ottawa has signalled it wants forestry addressed in the CUSMA review and in direct talks with Washington. Companies should keep detailed records of the tariffs’ impact, both to support any government relief program modelled on earlier rounds of assistance and to inform the legal and diplomatic case Canada may bring. In the meantime, diversification, toward domestic markets, toward non-U.S. export destinations, and toward higher-value products less exposed to the duties, remains the sector’s most durable, if slow-moving, hedge against a trade relationship that shows little sign of stabilizing.
For the broader Canadian business community, the forestry file is a cautionary example of how the Section 338 action reaches beyond the industries named in Washington’s rationale. Companies far from the auto, alcohol and dairy disputes that triggered the tariffs may nonetheless find their products on the list. Firms across sectors would be well advised to review whether their exports appear among the covered goods, to document any impact for potential federal relief, and to plan for a period of prolonged uncertainty as negotiations over the tariffs and the future of CUSMA unfold. For forestry, an industry that has weathered years of trade friction, the message is that stability remains elusive, and that the coming weeks of talks will matter enormously to mill towns across the country.