Canada’s softwood lumber industry is more than an economic staple it’s a trade battleground. In 2024, the country shipped over 20 million cubic meters abroad, with the United States absorbing the vast majority. But as tariffs climb and geopolitical pressures mount, Canada is waking up to a harsh reality: overreliance on a single customer can become a vulnerability. The sector now stands at a critical inflection point one that demands bold strategy, not business as usual.
Quick Summary: Canada–U.S. Softwood Lumber Dispute
The softwood lumber dispute is one of the longest-running trade conflicts between Canada and the United States, dating back to 1982. At its core:
U.S. Allegation: Canada unfairly subsidizes its lumber industry by administratively setting stumpage fees (the price to harvest timber), unlike the U.S. where prices are market-driven.
Canadian Position: Canada argues its system benefits a wide range of industries and doesn’t qualify as a subsidy under U.S. law.
Trade Actions: The U.S. has repeatedly imposed countervailing and anti-dumping duties on Canadian softwood lumber.
Economic Impact: These tariffs raise costs for Canadian exporters, increase U.S. housing prices, and create uncertainty for both markets.
Mark Carney’s August 5, 2025 Announcement
Prime Minister Mark Carney unveiled a $1.25 billion support package in West Kelowna, B.C., aimed at transforming Canada’s softwood lumber industry in response to the U.S. raising duties to over 20%. Key measures include:
Financial Supports
$700 million in loan guarantees to help companies restructure and maintain operations.
$500 million in grants and contributions to boost product development and market diversification.
Domestic Prioritization
Federal procurement will now prioritize Canadian lumber for infrastructure and housing projects.
Launch of Build Canada Homes, a $25 billion financing program for private builders using Canadian materials like mass timber.
Market Diversification
A new initiative to expand exports of Canadian wood products to fast-growing international markets.
Reinvigoration of federal programs to promote sustainable, high-quality Canadian lumber abroad.
Worker Support
$50 million for reskilling and income support for over 6,000 affected workers, including enhancements to Employment Insurance and Work-Sharing programs.
Strategic Vision
Carney emphasized shifting from “reliance to resilience”, reducing dependence on the U.S. market and building a stronger domestic and global footprint for Canadian forestry.
Positives & Market Diversification Examples
Positives from the Announcement
- Reduced vulnerability to U.S. trade actions.
- Boosted domestic demand through federal housing and infrastructure projects.
- Job protection and retraining for thousands of forestry workers.
- Innovation incentives for value-added wood products.
Market Diversification Examples
- Asia-Pacific Expansion: Promoting Canadian lumber in countries like Vietnam, Indonesia, and India, where housing demand is surging.
- European Partnerships: Targeting Germany and the Netherlands for sustainable building materials.
- Indigenous Forestry Ventures: Supporting Indigenous-led businesses to develop unique wood products for niche markets.
This pivot will reshape Canada’s forestry sector into a more globally competitive, innovation-driven industry.
Ontario’s Lumber Industry: What The Announcement Means
Mark Carney’s sweeping support package for Canada’s softwood lumber sector could be a game-changer for Ontario’s forestry industry. While B.C. often dominates headlines, Ontario is home to a robust lumber economy especially in northern communities like Thunder Bay, Timmins, and Sault Ste. Marie.
Here’s how the announcement could ripple through Ontario:
Boosted Demand from Domestic Construction
- Build Canada Homes, the $25B housing initiative, will prioritize Canadian lumber meaning Ontario mills could see increased demand for mass timber and softwood framing.
- Federal infrastructure projects (schools, transit, public housing) will now favor locally sourced wood, giving Ontario producers a competitive edge.
Diversification Beyond the U.S.
- Ontario firms will benefit from export promotion programs targeting Europe and Asia, helping reduce reliance on the U.S. market.
- The province’s sustainably harvested wood is well-positioned for eco-conscious buyers in Germany, Japan, and South Korea.
Support for Workers & Innovation
- Ontario’s forestry workforce especially in rural and Indigenous communities will gain access to $50M in reskilling and income supports.
- Grants for product development could help Ontario companies pivot to engineered wood, prefabricated panels, and other high-value products.
Strategic Upside
- Carney’s “reliance to resilience” strategy encourages Ontario to modernize mills, adopt green technologies, and scale up domestic processing.
- This could lead to new jobs, stronger regional economies, and less vulnerability to trade shocks.
How the Programs Help
- Market Intelligence: Ontario provides detailed insights into target markets like Germany, Japan, and India helping companies tailor their products and strategies.
- Trade Missions: Businesses can join government-organized trips to meet buyers abroad. For example, a company might attend a business mission to Japan to explore opportunities in the prefab housing sector.
- Training & Consulting: Exporters get access to workshops and one-on-one consulting. A firm could receive $9,600 to develop an export strategy for South America or $14,400 to expand into the U.S. market.
- Showcasing Products: Ontario helps companies exhibit at international trade shows. One example: a lumber firm showcasing mass timber panels at a green building expo in Germany.
- Online Visibility: Inclusion in directories like SourceFromOntario.com boosts visibility among global buyers.
Real-World Impact
A mid-sized sawmill in Northern Ontario:
- They attend a webinar series on exporting to the EU and learn about CE certification requirements.
- With help from Ontario’s export advisors, they develop a strategy to sell engineered wood to Germany.
- They join a virtual trade show and connect with a European distributor.
- Within a year, they’re shipping product overseas diversifying revenue and creating new jobs locally.
Why U.S. Supply Alone Falls Short
- Even after accounting for U.S. exports, the country is still short by over 3.2 billion board feet (BBF) of operable capacity to meet current demand levels.
- Canada supplies roughly 30% of the U.S. softwood lumber market, making it essential for clearing domestic demand.
- Ontario’s contribution is especially important for structural panels and framing lumber, which are in high demand for housing and infrastructure.
What New Demand Means
- With Carney’s housing initiative and export promotion programs, Ontario mills will face increased pressure to produce not just for the U.S., but also for Europe and Asia.
- The U.S. is trying to ramp up domestic production, including a 25% increase in timber harvesting from federal lands, but that will take time to impact supply.
Tariffs & Trade Tensions
- U.S. tariffs on Canadian lumber currently sit at 14.54%, with potential hikes to 27% or more by late 2025.
- These tariffs could discourage exports and tighten supply further unless exemptions like the one granted in April hold.
The ugly truth
Ontario’s lumber industry is critical to meeting both U.S. and new global demand. But to keep pace, it’ll need to scale up production, modernize mills, and navigate trade policy shifts.
Softwood Lumber’s Economic Footprint in Canada
Softwood lumber is a cornerstone of Canada’s forest sector, and its impact is both deep and wide-ranging:
GDP Contribution
- The entire forest sector contributed over $33.4 billion to Canada’s real GDP in 2022, accounting for 1.2% of the national economy.
- Softwood lumber, as the dominant product in the solid wood manufacturing subsector, makes up a significant share of this figure especially through exports and domestic construction.
- In 2024, 66% of Canada’s softwood lumber production was exported, with nearly 90% going to the U.S., underscoring its trade importance.
Employment Impact
- The forest sector supports nearly 200,000 jobs across Canada.
- This includes over 11,000 Indigenous workers, many of whom are employed in softwood lumber operations.
- More than 6,000 workers are directly affected by recent trade tensions and are targeted for reskilling and income support under Carney’s new plan.
Softwood lumber isn’t just wood it’s wages, exports, and community stability.
Where Canada’s Softwood Lumber Goes
Canada’s softwood lumber exports are heavily concentrated but there’s a growing push to diversify. Here’s how the numbers break down:
Canada’s Softwood Lumber Exports in 2024
In 2024, Canada exported approximately 20.2 million cubic meters of softwood lumber globally. This represents 66% of total national production, with nearly 90% of that volume shipped to the United States.
Breakdown Highlights
- U.S. Imports: Roughly 18.2 million m³ went to the U.S., valued at over $3.9 billion
- Other Markets: The remaining 2 million m³ were distributed among countries like China, Japan, and Western Europe, though exact volumes per country weren’t disclosed
Canada’s export-heavy lumber strategy is now facing headwinds from rising U.S. tariffs, prompting a major push to diversify markets and boost domestic use.
What’s next
Canada’s lumber leaders can no longer afford to wait and see. With punitive tariffs slicing into margins and market access shrinking, diversification is no longer a goal it’s a survival tactic. By forging new trade routes, investing in domestic innovation, and supporting affected workers, Canada has the chance to not just weather the storm, but rewrite its future in timber. The decisions made now will define the next generation of forest economics.