The Forest Products Association of Canada has welcomed C$7.5 billion in new federal support for Canadian businesses and workers affected by U.S. tariffs, while warning that the package will only be effective if forest-sector companies can access the assistance quickly.

The announcement comes as Canadian forest-product producers face a growing combination of U.S. trade measures, including new 50% Section 338 tariffs, existing softwood lumber duties and separate Section 232 tariffs.

According to FPAC, the combined tariff burden facing Canadian forest products now ranges from approximately 25% to 85%, depending on the product.

C$2 Billion Targets Regional Support and Liquidity

The federal package includes an additional C$1.5 billion for the Regional Tariff Response Initiative, intended to help businesses respond to trade disruption and adjust their operations.

Ottawa is also establishing a C$500 million liquidity program through the Business Development Bank of Canada.

The program is intended to address immediate cash-flow pressures and includes targeted assistance for forestry, steel and aluminum businesses.

Liquidity could become particularly important for exporters that continue serving U.S. customers while carrying substantially higher tariff costs.

FPAC, however, stressed that program design and accessibility will determine how useful the funding ultimately proves for companies facing immediate financial pressure.

Another C$2 Billion Targets Trade Diversification

The government will allocate C$2 billion to the Canada Strong Diversification Fund.

The initiative comes as Canadian industries face renewed pressure to reduce their dependence on the U.S. market and develop additional domestic and international customers.

For forest products, diversification is particularly challenging because of the scale and proximity of the American market.

FPAC President and CEO Derek Nighbor emphasized this limitation.

“No support package can replace reliable access to our largest export market,” he said.

The association continues to call for removal of the U.S. tariffs and a durable settlement of the longstanding softwood lumber dispute.

C$3.5 Billion Will Support Workers and Employers

Another C$3.5 billion will be directed toward workers and employers affected by the trade disruption.

Measures include temporary Employment Insurance flexibilities, workplace training and a new program intended to help employers retain workers.

The employment dimension is particularly important for Canada’s forest sector because mills and manufacturing facilities frequently anchor smaller and rural communities.

FPAC says the Canadian forest-products industry directly supports approximately 200,000 jobs and generates more than C$87.2 billion in annual revenue.

Value-Added Forest Products Face New Tariffs

The latest U.S. trade measures affect several products that Canada has been attempting to develop as part of a broader strategy to move further into value-added manufacturing.

FPAC identified plywood, laminated wood products, fibreboard, paper and packaging among the affected categories.

The association argues that imposing additional trade costs on these products creates another obstacle for companies investing in diversification and higher-value forest manufacturing.

The new Section 338 measures also arrive on top of trade barriers already affecting Canadian lumber.

As a result, the tariff exposure varies substantially between different forest-product categories rather than applying uniformly across the industry.

Canada Prepares Counter-Tariffs From September 8

Canada is responding with its own tariffs on U.S. products.

Beginning September 8, Ottawa plans to impose tariffs of 15%, 25% or 50% on C$27.6 billion of U.S. imports, depending on the product category.

Pulp and paper are included alongside steel, dairy products, appliances, agricultural equipment and electronics.

The retaliatory measures introduce another concern for manufacturers whose North American supply chains rely on materials or equipment moving in both directions across the border.

FPAC is therefore calling for remission mechanisms to prevent counter-tariffs from unintentionally increasing costs for Canadian businesses.

The association also wants tighter import monitoring to identify potential trade diversion and unfairly priced products entering Canada as international trade flows adjust.

FPAC Calls for Broader Forest-Sector Action

Beyond immediate tariff relief, FPAC wants Ottawa to accelerate implementation of recommendations from the Forest Sector Transformation Task Force.

Its priorities include improving economic access to fibre, regulatory efficiency, transportation competitiveness and wildfire resilience while supporting greater investment in value-added manufacturing.

The association also wants federal housing, infrastructure and procurement programs to create stronger domestic demand for Canadian wood and forest products.

These measures could help reduce some of the industry’s dependence on export markets, but FPAC maintains that domestic support cannot substitute for stable access to the United States.

The C$7.5 billion package therefore provides a financial response to the immediate trade disruption, but the larger issue remains unresolved.

For Canadian forest-product producers, the key questions now are how quickly the federal assistance reaches affected companies and whether Canada and the U.S. can ultimately reduce the trade barriers reshaping cross-border forest-product flows.

Last Updated on 26/08/2026 by Jota Machinery