A 25 per cent tariff on Canadian products exported into the United States would hit hard, with British Columbia’s lumber and wood product producers dependent on sales to the U.S. market.
BC’s softwood lumber industry exports accounts for $4.5 billion of the $800 billion in goods that cross Canada’s border into the U.S. each year.
In Prince George, most of the finger-jointed stud-grade lumber made at Brink Forest Products on River Road is shipped to Texas. That amounts to 125 million board feet annually.
Owner John Brink says his American customers will be stuck with absorbing the 25 per cent increase at the border while Canada comes to terms with finding a collective solution to remove interprovincial trade barriers and work together to create new overseas markets for Canadian-made goods.
“If he proceeds with it that price will go up and that potentially creates inflation and other associated problems with it and Canada is not going to sit back silently and allow this to go forward,” said Brink.
“It sends a message to us that although the U.S. relationship has been the foundation for economic well-being in North America, that this will change everything. Once you become unreliable as a person, as a country, then people will look seriously at other options.
“This will change everything and that means that even the things we don’t even imagine will be affected by it. Potentially, inflation will go up in both countries and a recession may be around the corner, that’s how delicate it is and that’s the reality.”
Trump’s tariff is in addition to an already existing tax Canadian secondary manufacturers pay to access the U.S. market. Last August, Brink was hit with a near-doubling of softwood duties when the rate increased from 8.05 per cent to 14.54 per cent.
“That makes it 39.5 per cent in export duties and that likely will go even further towards the end of this year and may get to as high as 55 per cent,” said Brink. “I don’t know anybody who has those kinds of margins.
“The key is for the financial institutions to stay calm and don’t be bullied, but at the same time don’t become panicky. We have the best country, best location, best resources and we have to simply make sure we never again be as reliant on the United States or one market as we have been in this case. We have everything we need to be successful but we have to stay together and financial institutions have to work with industry so we don’t lose people or companies because of that.”
Brink said he’s been in business in Prince George for 50 years and if his company and its 300 employees has to reinvent itself to stay competitive and protect those jobs he'll do that.
He doesn’t foresee any pending layoffs or curtailments.
“I hope not, but I’m just playing it on a day-to-day basis,” said Brink. “We’re not operating this week because of cold weather and shortage of fibre and then obviously the economic conditions, and hopefully that’s just this week.
“If a number of mills shut down that we rely on for their supply then it will affect our employees as well and I hope that doesn’t happen. We’ll do everything we possibly can do. This is the point where governments working together, provincially and federally, as an industry saying what can we do to assist and help each other preserve an industry that’s already half the size as it used to be 2000.”
Brink agrees with Prime Minister Justin Trudeau’s response, with counter-tariffs on U.S. products coming into Canada.
“You cannot be bullied by a bully and I think we are taking the right steps in the right direction,” Brink said. "This takes everybody, including the mayor and council in Prince Georg,e to take on that leadership role saying we have to protect the investments we have.”
BC lumber producers export 85 per cent of what they make and about 65 per cent of that goes to the United States. Another 20 per cent is sent overseas to China, Japan, South Korea and India and 15 per cent is marketed in BC and Canada.
Canada and Mexico are among 11 countries in the Asian Pacific Trade Agreement, now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CTATPP) and Brink says he might have to utilize those trade pact connections to find new markets.
“We are a value-added manufacturer and we developed a niche product that is uniquely aimed at the U.S. market,” said Brink. “There’s not much of a market (in Asia) for dimension lumber either, other than the very high grades in Japan or the very low grades in China. Dimension is typically manufactured for the purpose of building houses the way they are built in North America.
“The other part for Canada is to stay united and take the politics out of it and work together as a country and open up the borders between the provinces. It doesn’t make sense to me to have border restrictions in Canada. We have to work together. This is protecting our country that is so richly blessed with resources and such an amazing location. The world needs what we have.”
The pending tariffs are just the latest in a long line of trade barriers that have battered a Canadian forest industry already struggling with the lasting effects of mountain pine beetle infestation and forest fires that have severely reduced timber supplies.
Trade relations between the two countries have been strained since the early ’80s when American lumber producers objected to Canadian mills harvesting trees on Crown land. The U.S. sees that as an unfair subsidy that makes their own producers less competitive on the open market and has a history of retaliating with counterveiling duties. But on numerous occasions Canada has successfully won court challenges over those duties through dispute resolution provisions of the World Trade Organization (WTO), the North American Free Trade Agreement (NAFTA).
Canada’s share of the U.S. lumber market dropped substantially in 2006 with the Softwood Lumber Agreement (SLA) a deal that resulted in more than $5 billion in duties returned from U.S. authorities to Canadian producers. As part of the agreement, the US government and American lumber industry agreed not to launch any countervailing or anti-dumping duty investigations against Canadian softwood lumber producers for one year after the SLA’s expiration in October 2015.
In 2027, those investigations resumed and the Trump government imposed anti-subsidy tariffs on Canadian softwood lumber imports that averaged 20 per cent. Some companies, such as West Fraser Timber, are currently paying 24 per cent, while Canfor’s tariff rate was set at 20.26 per cent.
Canada is currently utilizing dispute resolution mechanisms under WTO, NAFTA and the Canada United States Mexico Agreements (CUSMA) to overturn those duties.
According to the BC Council of Forest Industries, B.C.’s forest industry contributed nearly $17 billion to the provincial gross domestic product in 2022. The industry also supports more than 9,900 local suppliers in 340 communities, including 220 Indigenous nations and organizations, accounting for a combined $7 billion in goods and services.
