Canada-U.S. commerce battle will exasperate an already struggling forestry sector says official.
THUNDER BAY — Nervousness about tariffs nonetheless looms over the forest trade, regardless of the Canada-U.S. commerce battle being delayed 30 days.
“There’s a great deal of concern. The 30-day reprieve is welcome, but effectively, it means nothing until it’s been resolved,” mentioned Ian Dunn, chief govt officer of Ontario Forest Industries Affiliation.
Dunn mentioned that Ontario trades 97 per cent ($7.7 billion) of its lumber merchandise with the U.S. and a 25 per cent tariff would have a $2 billion affect.
“Look what happened during the pandemic when there was a shortage of supply to the American market because there was reduced staffing at the mills and a reduced supply of lumber into the market,” mentioned Dunn.
“An enormous demand for housing renovations and new indifferent properties in the USA. The worth of lumber per 1,000 board ft, it went as much as like $1,600, and normally, we see $500 to $600 per 1,000 board ft. So, it went past what anybody had seen earlier than within the lumber market.
“If there’s a 25 per cent tariff, an extra tariff on the border for lumber, what we might see is probably going extra lumber flooding the home market.
He said the trade is “not new to trade disputes.”
Buying and selling of softwood lumber has been a trigger for fixed rivalry between Canada and the U.S., he mentioned.
Lumber shipped to the U.S. already has a 14.5 per cent responsibility connected, mentioned Dunn, and one other 25 per cent would elevate the price of importing lumber into the U.S. to 39.5 per cent.
“If there was a tariff in place, ultimately what that would mean is higher costs for the American consumer. Our companies would largely pay the tariff at the border, but there would be some expectation that the customers would have to pull the slack,” Dunn mentioned.
“So, I believe the Trump administration understands that and can proceed to make use of this menace as a possibility to realize their political and nationwide safety targets.
Dunn mentioned because the commerce battle carries on importers in each international locations will choose to search out cheaper markets.
“There will be a breaking point, and what we’ve seen over the years is a quadrupling of offshore imports from lumber. So instead of sourcing lumber from America’s closest neighbour and trading partner, more lumber is being sourced from Brazil, Germany, Sweden. And that’s quadrupled over the last 8 years,” Dunn mentioned.
He anticipates a decline within the pulp and paper mill sector and the sawmill trade as effectively.
“Tariffs are already and duties are already having an impact on the region. Sawmills in the area have had a reduction of shifts. There have been layoffs. In other regions of the province, there have been closures in the sawmilling industry. There’s also been the idling of very important anchor mills in Terrace Bay and Espanola,” Dunn mentioned.
“I think in a lot of respects the damage has already been done. If you’re a multinational company looking to invest your dollars, you’re going to sense a lot of uncertainty in the marketplace right now. You would lose a lot of confidence in the Canadian-U.S. relationship,” he added.
“I consider the small family-run members in firms throughout the province, the small operators, I am positive they’ve misplaced numerous confidence. It’ll have an effect throughout the province.
Dunn said that Northwestern Ontario is lucky to have two anchor mills with Thunder Bay Pulp and Paper, and Dryden Fiber; nevertheless, within the northeast, “we don’t have as much pulp and paper capacity.”
“That capacity has been consolidated and rationalized and gone to other jurisdictions,” Dunn mentioned.
Shifting into new markets abroad can be a problem, in response to Dunn.
He mentioned Ontario is “essentially landlocked.” Some firms do ship their wooden abroad however at a heftier value.
“It’s expensive because you have to handle the product more, and the supply chain isn’t as developed,” mentioned Dunn.
He famous that there are some alternatives to maintain the lumber trade afloat, together with updates to the Ontario constructing code to allow mass timber building as much as 18 tales.
“It is a small market phase proper now, however it’ll develop over time,” mentioned Dunn.
The lumber trade has already begun shifting into new markets inside Canada’s borders with investments within the bioeconomy.
“There are really exciting opportunities in the energy space. So, for biomass fuels, and syngas. There’s a project happening around Lake Nipigon Forest, close to the Thunder Bay region, and renewable diesel and sustainable aviation fuel. There are all kinds of alternative products that can help the province achieve some energy security,” mentioned Dunn.
“We’ve seen some really amazing investments in the auto sector, the battery sector in the GTA in Southern Ontario, Southwestern Ontario, and we want to attract billions of dollars into the bioeconomy, the forest bioeconomy into Northern Ontario and Northwestern Ontario,” he added.
