Finance Minister Brenda Bailey and Premier David Eby look on before the start of the throne speech at the legislature in Victoria, on Feb. 18.CHAD HIPOLITO/The Canadian Press
The B.C. government is forecasting tough times in the forestry industry as U.S. tariffs take effect and lumber producers face timber constraints in the province.
The B.C. budget tabled on Tuesday said the provincial government is expecting lower annual volumes of tree harvesting over the next three years, restricting the production of softwood lumber.
“Total annual harvest volume on Crown land is projected to average 30 million cubic metres over the fiscal plan,” according to the budget released by B.C. Finance Minister Brenda Bailey.
British Columbia, the country’s largest lumber producer, is still feeling the lingering effects of natural disasters in the past.
“The impacts of the mountain pine beetle infestation and forest fires have reduced the supply of timber available to the forest industry,” according to the budget documents. “Government is also protecting more of the oldest and rarest forests through the old-growth deferral strategy.”
Sweeping 25-per-cent tariffs implemented on Tuesday mean a double whammy of levies against Canadian softwood producers, which are already paying existing U.S. duties of 14.4 per cent on lumber shipped south of the border.
“The tariffs are completely unjustified and will impose higher prices and needless economic pain on Canadian and American consumers and businesses,” Bridgitte Anderson, president of the Greater Vancouver Board of Trade, said in a statement.
“The new Finance Minister was given a difficult task as there was little fiscal room left to respond to unjustified tariffs.”
Forestry industry experts say that American consumers will end up forking over more money because the U.S. tariffs could mostly flow through to retail pricing.
Lumber companies in B.C. and other provinces are worried that with the tariffs now implemented, it will be especially painful because those new levies have been added on top of the U.S. duties.
Budget documents show that B.C. is anticipating $639-million in forestry revenue during the fiscal year that will end March 31, 2026.
By contrast, the province is predicting $920-million in natural gas royalties in the 2025-2026 fiscal year. The budget notes the economic boost that will arise from LNG Canada’s export terminal in Kitimat, B.C.
LNG Canada plans to begin exporting liquefied natural gas to Asia by mid-2025.
“On the trade front, export growth is forecast to be supported by LNG production,” according to the budget documents. “However, there is heightened uncertainty regarding global trade and the potential impacts from U.S. tariffs.”
Tuesday’s B.C. budget comes only three days after U.S. President Donald Trump ordered a new U.S. investigation into softwood lumber that is global in scope.
One executive order launches the investigation that would result in introducing tariffs globally on softwood imports and another order is designed to spur lumber production within the United States.
The 2006 Canada-U.S. softwood lumber agreement expired in 2015, with no replacement. In the latest round of the long-running trade fight, the Commerce Department started imposing tariffs in 2017 on shipments of Canadian lumber.
Currently, the anti-dumping duty rate is 7.66 per cent and the anti-subsidy duty rate is 6.74 per cent for most Canadian softwood producers.
In an announcement on Monday for preliminary rate revisions, the Commerce Department said it plans to raise anti-dumping duties for most Canadian lumber producers to 20.07 per cent.
The Commerce Department’s decision will be subject to further revisions before a final anti-dumping rate is determined, with an effective date in August.
Canadian producers have been paying U.S. duties for the past eight years, but the new tariffs will likely be paid by mostly U.S. importers.
The influential U.S. Lumber Coalition has long argued that Canadian producers receive unfair provincial softwood subsidies and dump product.
Global Affairs Canada, however, counters that international panels have consistently ruled in favour of Canada as a fair trading partner. The Canadian forestry sector emphasizes that American consumer demand far exceeds the supply capacity of U.S. sawmills.
The cross-border dispute revolves around U.S. restrictions on Canadian sales of softwood to American buyers.
The U.S. says the measures are necessary to protect its lumber industry, because Canadian forests are mostly on public land, where buyers pay “stumpage fees” to provincial governments for the right to log. The U.S. argues those fees can give Canadian companies the competitive advantage over their American counterparts, which harvest timber largely from private lands and bid against each other for the privilege.
Over the past dozen years, Canadian-based companies have increased their presence in U.S. forests and gained the side benefit of production at their American operations being exempted from duties.