Canada pledges C$6.5 billion to retool forest industry squeezed by U.S. tariffs

Rubber and Wood  |  2026-11-06 03:25:09   |   By

Natural Resources Canada would get C$2 billion to help forest companies modernize facilities and equipment, raise productivity and expand output of higher-value products, and to fund research, development and demonstration projects.

SEATTLE (Scrap Monster): Canada's federal government pledged C$6.5 billion, or about $4.6 billion, over six years to help its forest industry withstand U.S. tariffs and weaker demand for wood products, in a budget Finance Minister François-Philippe Champagne tabled on Thursday. The budget says the sector, which employs nearly 200,000 workers and added C$29.7 billion to the country's GDP in 2025, is under significant pressure from what it calls 'unjustified' U.S. tariffs, as well as changing global markets and shifting demand for wood products, and must raise its productivity to keep pace.

The largest piece, C$4 billion, would go to Export Development Canada for a new Forestry Sector Accelerator to invest in new large-scale facilities and in major conversions of existing ones, including biorefineries, biofuel plants and other facilities making higher-value forest products. The money would flow through the Canada Account, the window the government uses for financing it directs itself rather than the agency's regular lending.

Natural Resources Canada would get C$2 billion to help forest companies modernize facilities and equipment, raise productivity and expand output of higher-value products, and to fund research, development and demonstration projects. A further C$500 million would go to the department to strengthen wood fibre supply chains and support provinces, territories, Indigenous partners and industry in forest management and the rollout of new technologies.

None of the money flows before the 2027-28 fiscal year, which starts in April 2027. The budget's spending table books C$554 million a year for the package from 2027-28 through 2030-31. In the meantime Canadian softwood lumber shipped to the U.S. pays combined antidumping and countervailing duties of 24.75% for most producers, down from 35.16% since October 19, when the final results of the review of 2024 shipments took effect, plus a 10% Section 232 tariff in force since October 2025, and producers such as Conifex Timber have cut output.

The package follows the Forest Sector Action Plan launched in June and Budget 2025's C$500 million over three years for Natural Resources Canada programs and up to C$700 million in loan guarantees through the Business Development Bank of Canada.

The Forest Products Association of Canada said it was encouraged by the measures. 'It's time to move from promises to production,' said Derek Nighbor, the association's president and chief executive, in a statement, adding that the full Forest Sector Transformation Strategy is expected in the coming weeks.

Courtesy: www.lesprom.com