Lumber producers praise federal plan to diversify markets amid trade war with U.S.
The measures announced this week by Prime Minister Mark Carney include programs to diversify and expand trade by marketing Canadian wood products abroad and prioritizing domestic lumber in a national housing construction push.
That is a tall order. The industry has sought for years to bolster sales globally as the United States imposed crippling duties on producers, and now those duties look set to increase while President Donald Trump's threat of additional tariffs also looms.
Mr. Carney pointed out that nearly 90 per cent of softwood exports still go to the U.S., even as overall exports have fallen sharply over the past decade.
Resolving the long-running trade dispute with the U.S. remains a top priority, but the new measures will make sure mills keep operating and employees keep working, said Eric Johnson, the vice-president of federal government relations with the Forest Products Association of Canada.
'We're never going to diversify our way out of the U.S. The history, the proximity, the product qualities and their sheer demand – the economics just don't allow for that,' Mr. Johnson said. 'But finding ways to lessen our reliance on them, that's what this will do.'
Carney announces $1.2-billion in lumber industry supports
The package features $700-million in loan guarantees that companies can use to get financing to support and restructure their operations. Producers will also have access to $500-million in grants to diversify their markets and develop new product lines, such as reinforced timber and wood-fibre-based insulation used in prefabricated homes.
The Prime Minister has laid out plans to double housing starts to 500,000 units a year through 2035.
Canadian lumber producers can also benefit from priority procurement for other federal programs, such as housing on military bases as defence spending ramps up, Mr. Johnson said.
However, Vancouver-based forestry analyst Russ Taylor said global market diversification is a long-term objective for an industry that is under pressure today. 'For softwood lumber that's not really much of a starter, unfortunately. We've been doing that for decades and we keep coming back to the U.S. market,' he said.
Almost 90 per cent of the lumber produced in B.C. is exported. The largest destinations after the U.S. are China and Japan, though those shipments are relatively small – 9.4 per cent and 6.7 per cent, respectively, Mr. Taylor pointed out.
Markets in Europe, meanwhile, are tougher to crack because European sawmills have implemented technology that offers more variability in lumber dimensions, which means they can tailor sizes to customer preferences rather than offering primarily imperial-unit dimensions, he said.
'They can sell into any of our markets, and we can only sell into a couple of their markets – that's the difference,' Mr. Taylor said. 'In Europe, the wood costs are currently very high, so they have some competitive issues in some markets, but that will come off. That's a temporary thing.'
During his announcement this week, Mr. Carney referenced Canada Wood Group for its success over the past two decades promoting wood-based construction in Asia, which lags North America in terms of that building method. The non-profit agency, funded by government and industry, has been encouraging the implementation of building codes that support more lumber use and, recently, multifamily home construction using Canadian lumber in Japan, China, South Korea and Britain.
The federal government pulled most of its funding in 2023, which forced the group to cut international staff to nine from 60. Canada Wood hopes a renewed push to diversify markets will lead to a restoration of its funding. Last year, it asked Ottawa for $5-million.
A decade ago, when the agency was still fully funded, Canada exported 3.5 billion board feet of softwood lumber to China. Volumes have since dropped off to a fraction of that, Mr. Johnson said, noting the correlation.
Bruce St. John, Canada Wood's president, said he is optimistic after the Prime Minister's comments.
'We think that's positive,' he said. 'We have some meetings set up with the government in the middle of August and we're hoping to get some clarification at that time as to what it looks like and how it's structured.'
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