The latest increase in U.S. tariffs on Canadian softwood lumber is creating chaos in New Brunswick’s forestry sector and raising serious concerns about the future of its exports.
Chris Spencer, manager of the Southern New Brunswick Forest Products Marketing Board, which represents more than 8,000 private forest owners, said the combined duties and compensatory tariffs, which now reach 45 per cent, are putting intense pressure on an already fragile industry.
“There are not many margins that can tolerate that type of tax or levy,” he said. “Personally, I think it’s enough to devastate an entire sector here in the Maritimes and probably all of Canada.”
Earlier this week, U.S. President Donald Trump announced an additional 10 percent tariff on Canadian softwood lumber but used the vague term “timber,” which has created widespread confusion among producers and U.S. border officials, Spencer said.
He said some trucks carrying loads of lumber crossed the border Wednesday believing their products were exempt. That assumption turned out to be incorrect.
“We’ve had trucks stopped at several border crossings because customs officials didn’t know what products were included,” Spencer said. “At some crossings, we were told that only softwood roundwood was affected, while others said all forest products were affected.”
He said different interpretations were reported at each of the four major international crossings between New Brunswick and Maine, leading to shipping delays and widespread uncertainty across the sector.
“Chaos is an understatement,” he said. “It’s one thing to face a difficult market. It’s worse when you don’t even know what rules you’re playing by.”
David Campbell, a New Brunswick economist, believes the 45 per cent tariff is unsustainable as New Brunswick’s forestry sector is heavily dependent on US markets.
“We will see more sawmills closing in the province, at least in the short term, paralyzing their production,” he said, adding that this has knock-on effects because there are not enough byproducts to produce paper products, for example.
The United States is the largest market for New Brunswick’s lumber, lumber and paper products, worth $3.74 billion annually, according to an economic impact report prepared by Campbell for Forest New Brunswick, a nonprofit industry association that represents the province’s forestry industry.
About 45 percent of the value of the industry’s exports goes to other provinces in Canada, according to the report, while 80 to 90 percent of international exports go to the United States.
“We produce a lot more lumber and paper than the Canadian market can handle,” Campbell said. “Without access to the United States, companies may be forced to reduce capacity.”
The SNB board is the largest of the province’s seven forest marketing boards and represents producers working exclusively on private lands, which represent approximately 30 per cent of New Brunswick’s forest area. Many of these producers export directly to Maine, supporting factories on both sides of the border.
Spencer said the uncertainty has already disrupted long-standing contracts with major buyers like JD Irving Ltd. (JDI), the province’s largest forestry company.
It said its members would normally have four-month delivery agreements with the company, but their latest contracts are only 10 weeks long, which is a direct reflection of the uncertainty.
“Even they don’t know what’s coming from Washington,” he said.
American factories may benefit in the short term from reduced Canadian competition, but Spencer said American consumers will feel the long-term impact of higher tariffs.
“This is pure protectionism,” he said. “And at the end of the day, it’s American homebuyers who will pay the most for lumber.”
Spencer said some Canadian producers with operations on both sides of the border could mitigate their losses, but most can’t adapt quickly enough.
“We’ve learned a painful lesson: We can’t find new customers fast enough and we can’t make long-term investments if we don’t know the rules,” he said.
Spencer said the escalating trade conflict highlights the urgent need for a renewed agreement under the Canada-United States-Mexico Agreement (CUSMA) to resolve the softwood lumber dispute.
“This cannot continue,” he said. “The forestry sector supports thousands of jobs and we need a respected long-term agreement, not just a temporary solution.”
Meanwhile, JDI has continued to expand its presence in the United States with facilities in Georgia, New York and Maine. Its subsidiary, Irving Tissue Co. Ltd., announced last year that it would invest $600 million to expand a tissue factory in Georgia, adding 100 jobs there.
Campbell said he believes companies like Irving are pressuring U.S. lawmakers (particularly in red states) to recognize them as integrated American companies, not foreign exporters.
“This is no longer just a Canadian operation,” he said. “These companies are creating jobs in the United States. That’s a strong argument in favor of the exemption.”
The new tariff increase has also reignited a familiar rift in the United States between domestic lumber producers, who support higher tariffs, and the American home construction industry, which warns that such measures raise housing costs.
“Home builders don’t want lumber prices to skyrocket; that reduces housing affordability,” Campbell said. “We’ve seen this tension before and it could be key to finding a solution.”
The National Association of Home Builders has previously urged U.S. administrations to avoid excessive taxes on Canadian softwood lumber to avoid higher construction and housing costs.
• Email: arankin@postmedia.com
