Carney vows $1.2 billion bailout for lumber sector hit by Trump tariffs

Prime Minister Mark Carney promised as much as $1.2 billion to shore up Canada’s lumber industry, which has been hit hard by U.S. duties that are about to significantly increase.

Carney said Tuesday that up to $700 million in loan guarantees will help forestry companies of all sizes maintain and restructure their operations. He also pledged $500 million in grants and contributions for product development and market diversification.

“Canada does not dump lumber into the United States, and we will continue to make the case that these current and proposed duties are unjustified,” Carney said in West Kelowna, B.C.

“We are a vital supplier to our southern neighbour, representing around a quarter of the U.S. market and helping to keep down the costs of American homes.”

The dispute between the U.S. and Canada over softwood lumber stretches back decades, with the U.S. periodically imposing duties to counteract what it claims are unfair Canadian government subsidies.

The U.S. Commerce Department is expected on Friday to conclude hiking duties on Canadian softwood to about 35 per cent from a previous total of 14.4 per cent. That’s a combination of anti-dumping and countervailing duties.

U.S. President Donald Trump has escalated the fight even further, ordering an increase to U.S. lumber production and an investigation of the national security risk of lumber imports. The probe is under Section 232 of the Trade Expansion Act, which Trump has already used to place new tariffs on steel, aluminum and copper.

Canada shipped $40.3 billion of forest products and building and packaging materials to the U.S. last year, its fifth-largest category of exports to its largest trading partner.

Carney said his government would launch its promised homebuilding agency, called Build Canada Homes, in the fall, which will prioritize Canadian lumber, steel and aluminum in construction.

It will also require companies contracting with the federal government to source domestic lumber.As well, the government will draft new initiatives to diversify international markets for Canadian lumber, along with retraining programs for workers, he said.

Canada has long denied the U.S. claim that it sets artificially low “stumpage rates,” fees sawmills pay to provinces to harvest timber from government-owned forests.

The World Trade Organization in 2020 largely backed Canada’s argument that U.S. levies were unfair.

But that stance may be softening. Last month, British Columbia Premier David Eby told Bloomberg News that some Canadian leaders are open to a quota on softwood lumber exports to the U.S. in order to resolve the dispute.