Prime Minister Mark Carney greets employees after touring the Gorman Brothers Lumber sawmill and making an announcement, in West Kelowna, B.C., on Tuesday.DARRYL DYCK/The Canadian Press
Prime Minister Mark Carney said on Tuesday his government will provide $1.2-billion in financial supports to help Canada’s softwood lumber producers deal with crippling U.S. trade duties.
The package includes $700-million in loan guarantees that will allow forestry companies to get financing to support and restructure their operations to reduce the industry’s heavy reliance on exports to the United States.
Ottawa will also provide $500-million in grants and contributions in an effort to diversify markets and develop new product lines such as reinforced timber and low-carbon, wood-fibre-based insulation used in prefabricated housing.
As part of the program, the government will prioritize the use of Canadian lumber in its plans to kick-start a rush of housing construction across the country, Mr. Carney said in a speech at a lumber mill in West Kelowna, B.C.
Prime Minister Mark Carney says his government will provide $1.2-billion in financial supports to help Canada’s softwood lumber industry.
The Canadian Press
It will be integrated with a strategy called Build Canada Homes to double the rate of new home construction to 500,000 units a year through 2025. Such an increase will double the use of Canadian softwood lumber in new homes to nearly two billion board feet per year while also doubling demand for structural panels, he said.
As it stands, almost 90 per cent of Canadian lumber exports go to the U.S., where President Donald Trump has raised duties on those shipments in the latest salvo in a softwood skirmish that goes back decades and is now threatening more financial hardship for domestic producers.
“This dependence creates costly uncertainty. It weakens our industry’s ability to weather downturns. It makes lumber more expensive for builders at home, and it forgoes enormous opportunities in fast-growing markets around the world,” Mr. Carney said.
The funding will include programs to support Indigenous-led business development, which the government has deemed a priority for its efforts to make the Canadian economy more self-sufficient.
The U.S. has long targeted Canadian softwood exports as unfair because it says the fees that producers in Canada pay to harvest trees on Crown land are too low. It also alleges that Canadian producers are dumping timber in the U.S. market at below fair value.
Last month, the U.S. Commerce Department increased anti-dumping duties on Canadian softwood producers to 20.56 per cent.
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The move lifts duties against most Canadian producers to 27.3 per cent. Meanwhile, if countervailing duties are raised further to levels announced on a preliminary basis in April, the total would be roughly 35 per cent. The BC Lumber Trade Council called the duties unjustified and harmful.
Mr. Trump has raised the tariff on most Canadian goods to 35 per cent, though that represents a fraction of exports, as most are exempt under the rules of origin outlined in the United States-Mexico-Canada Agreement on trade.
Industry groups welcomed Ottawa’s support for softwood exporters, while also urging the government to resolve the long-running trade dispute with the U.S. The lumber trade council said a government plan within the list of supports to assist workers is a necessary step.
Mr. Carney said Ottawa will make $50-million available to retrain industry employees whose jobs will change or are jeopardized as a result of the transformation in the industry.
His government also plans to launch new programs to diversify markets for Canadian lumber, emphasizing to trade partners that green building offers environmental and economic opportunities in hopes that the Canadian industry can share in global opportunity of $150-billion to $240-billion.
Producers will benefit immediately from the liquidity afforded by the loan guarantees, as they are forced to pay the duties, though many of the other aspects of the program are longer-term in nature or have been tried in the past, Vancouver-based forestry analyst Russ Taylor said in an interview.
Mr. Carney referenced a program called Canada Wood, which has promoted wood-based construction in global markets, including Asia.
“They shut that down, almost, a couple years ago. They ramped that down from, like, 60 people in the field to about six, because there’s no more gains in international markets under the Canada Wood program, which is more sort of promotion and codes and standards. And now he wants to ramp it back up,” Mr. Taylor said.