Canadian plywood producers are facing a new trade barrier in their largest neighboring market after the United States began collecting an additional 50% tariff on covered Canadian goods, including much of the plywood and veneered-panel trade.

The measure took effect on August 22, 2026, after a three-day suspension expired without a new Canada-US trade agreement.

For the forest products industry, however, the impact is uneven. Plywood and veneered panels are directly exposed to the new Section 338 duties, while Canadian softwood lumber is excluded from the additional 50% tariff because it is already subject to separate Section 232 measures.

Canada is now preparing retaliation of its own. Prime Minister Mark Carney says countermeasures will take effect on September 8, with pulp and paper among the sectors expected to be covered.

The result could be a new layer of trade disruption for a North American forest products supply chain that is already dealing with tariffs, lumber duties and weak market conditions.

Canadian Plywood Faces the 50% Section 338 Duty

The new US measures stem from proclamations issued under Section 338 of the Tariff Act of 1930.

Plywood and veneered panels are extensively represented among the forest products covered by the tariff schedule.

The Forest Products Association of Canada previously identified 98 forest-product tariff lines affected by the July proclamations.

Following a temporary suspension while negotiations continued, US Customs and Border Protection instructed importers that the new rates would begin to be collected once the pause expired.

For Canadian plywood manufacturers exporting to the United States, the additional 50% duty creates an immediate competitiveness problem.

A tariff of this size can materially change the landed cost of Canadian panels compared with domestically produced material or imports from alternative suppliers.

How much of that additional cost ultimately falls on Canadian producers, US importers or downstream customers will depend on contracts, market conditions and buyers’ ability to switch suppliers.

Softwood Lumber Avoids the New 50% Tariff

The situation is different for Canadian sawn softwood lumber.

The Section 338 measure exempts products already subject to tariffs under Section 232, preventing the new 50% duty from simply being added to the existing Section 232 tariff.

That does not mean Canadian lumber enters the United States tariff-free.

Softwood lumber remains caught in the longstanding Canada-US trade dispute and continues to face existing antidumping and countervailing measures alongside the applicable Section 232 tariff.

The distinction is therefore important.

Canadian plywood: exposed to the new Section 338 tariff.

Canadian softwood lumber: excluded from the new Section 338 tariff but still subject to its existing trade measures.

For Canadian forest-products companies, this creates very different cost structures even for products moving across the same border.

Canada-US Negotiations End Without Agreement

The duties took effect after negotiations in Washington failed to produce an agreement before the deadline.

Prime Minister Carney suspended negotiations shortly before the deadline, arguing that the terms being offered by Washington were not commercially acceptable.

“In short, they asked too much, and they offered too little,” Carney said.

According to the prime minister, Canada had been prepared to remove remaining counter-tariffs on American steel, aluminum and automotive products in exchange for reciprocal reductions from the United States.

US Trade Representative Jamieson Greer presented a different interpretation of the negotiations, saying Washington had offered tariff reductions covering areas including steel, aluminum, automobiles and lumber.

No further negotiations were scheduled immediately following the breakdown.

That leaves forest-product companies trying to assess not only the tariffs currently in force but also the possibility of additional measures if the trade dispute escalates.

Canada Plans September 8 Counter-Tariffs

Canada’s response could directly affect the pulp and paper industry.

Carney has identified several sectors expected to be included in Canada’s retaliatory measures:

• Steel
• Dairy
• Appliances
• Agricultural equipment
• Pulp and paper
• Electronics

The counter-tariffs are scheduled to take effect on September 8, 2026.

Ottawa has not yet published the detailed tariff-line schedule, meaning it is not yet possible to determine exactly which pulp, paper, paperboard or converted-paper products will be covered.

That distinction matters.

“Pulp and paper” covers a very broad industrial category, ranging from market pulp and printing papers to tissue, containerboard and potentially other paper products.

Until Canada publishes the tariff classifications and applicable rates, companies should therefore avoid assuming that every US pulp and paper product entering Canada will face the same treatment.

North American Paper Supply Chains Could Feel the Effects

The American Forest & Paper Association had already warned about the consequences of broad tariffs on Canadian forest products.

AF&PA President and CEO Heidi Brock said after the original US measures were announced that tariffs on Canadian inputs could create disruption and uncertainty for industries operating across the border.

The concern reflects the structure of the North American forest-products industry.

Canada and the United States do not operate as completely separate pulp, paper and packaging markets. Raw materials, pulp, paperboard, recovered fiber and converted products can move across the border at different stages of production.

A tariff imposed at one point in that chain can therefore affect manufacturers farther downstream.

Canadian counter-tariffs on US pulp and paper could raise the landed cost of affected American material for Canadian buyers. Depending on the specific products eventually included, converters could need to evaluate alternative domestic or overseas suppliers.

US buyers of affected Canadian products face the opposite calculation.

The significance will become clearer once Canada releases its tariff schedule.

Trade Pressure Comes During a Difficult Period for Canadian Forestry

The escalation arrives when Canada’s forest-products sector, particularly in British Columbia, is already under considerable pressure.

Canadian producers are dealing with softwood lumber trade measures, volatile commodity markets, fiber availability constraints and a series of mill curtailments and closures.

Adding substantial tariffs to plywood exports creates another challenge for producers dependent on the US market.

The consequences may also extend beyond individual mills.

Lower export competitiveness can affect production rates and wood demand, while changing trade flows can influence distributors, transportation companies and downstream manufacturers.

The same uncertainty applies to Canada’s forthcoming pulp and paper tariffs.

Depending on their scope, the measures could alter purchasing decisions for Canadian paper converters, packaging manufacturers, printers and other companies sourcing material from US suppliers.

September 8 Becomes the Next Date to Watch

For the forest-products industry, the trade dispute has now moved into two separate phases.

The US tariffs are already affecting covered Canadian products.

Canada’s response is still being defined.

The most important information for pulp and paper companies will therefore be Ottawa’s detailed tariff schedule: which HS codes are covered, what rates will apply and whether exemptions are provided for particular products or supply-chain circumstances.

Until those details are published, the direct impact on individual pulp, paper and packaging grades remains uncertain.

What is already clear is that forest products have moved deeper into the Canada-US trade dispute.

Canadian plywood exporters now have to contend with a 50% US tariff, existing softwood lumber trade barriers remain unresolved, and pulp and paper products are preparing for another potential disruption when Canada’s retaliatory measures begin on September 8.

Last Updated on 24/08/2026 by Jota Machinery