Ontario Forest Industries Affiliation president portrays an business struggling for survival within the Trump tariff period
Cross-border quarrels between Canada and the U.S. over items and provide are nothing new, having its roots within the pre-Confederation days of the Jay Treaty of 1794, mentioned Ian Dunn.
The president-CEO of the 51-member Ontario Forest Industries Affiliation (OFIA) calls the continued battle over exported Canadian lumber to the U.S. “most likely the most important international commerce dispute” because the shut of the Second World Warfare.
“Tariffs should not a brand new factor for the lumber producers and our membership,” mentioned Dunn.
Whereas the Trump administration determined Feb. 3 to punt 25 per cent tariffs on Canadian items down the highway for 30 days, the menace to Ontario’s already weak forestry business stays very actual.
About 97 per cent of Ontario’s forest merchandise exports yearly – amounting to $7.7 billion of commerce – heads to the U.S. within the type of lumber, pulp, newsprint and structural panels.
Slap on a 25 per cent tariff and that’s near $2 billion popping out of Ontario.
“If it’s $2 billion, from speaking to members, it’s going to be very, very tough (for producers) to proceed with their operations,” mentioned Dunn.
Tack on high of that an anticipated enhance in softwood lumber duties by this summer season and it might ship a extreme blow to the struggling business, leaning beneath the burden of U.S. dumping and countervailing duties since 2017.
The present Canadian lumber duties on shipments to the U.S. is 14.4 per cent. By August, it’s probably lumber duties can be round 30 per cent as a part of the subsequent U.S. authorities evaluation.
Ought to the mixture of elevated duties and Trump tariffs stay in place for an prolonged time period, Ontario’s forest business could be a shadow of its former self.
“The underside line is that, if there’s an business left in Ontario, it will be very small,” mentioned Dunn.
Although loads of elements stay at play with the alternate charge and market circumstances, for Canadian lumber producers at present, “it’s mainly a break-even proposition, even with a 15 per cent tariff charge.”
The impacts have already hit the Canadian forest business laborious, significantly in Western Canada with sawmill closures and manufacturing curtailments.
Some OFIA members had been shutting down mills final yr after being in operations for many years, others had been eradicating shifts and taking operational downtime, mentioned Dunn.
“It’s already being felt.”
It’s been a difficult surroundings for forestry for fairly a while in an ideal storm state of affairs in Ontario with the idling of mills in Espanola and Terrace Bay.
“Long term, persons are bullish on lumber and forest merchandise usually, however it’s going to be a interval of ache,” mentioned Dunn,
A variety of OFIA members with U.S. prospects are involved about their means to keep up the availability chain throughout the border as appreciable lumber manufacturing capability has left Canada and settled within the southern U.S.
Again and again, Canadian producers have run up in opposition to a really rich and politically well-connected American lumber foyer in Washington and a compliant U.S. Division of Commerce that’s maintained import duties on lumber during the last decade.
Canadian producers and OFIA are hoping its American prospects and U.S. development associations will help flip the tide.
The tariff menace has spurred the American Nationwide Affiliation of Dwelling Builders and chairman Carl Harris to state that this new commerce barrier “can have the other impact” of the Trump administration’s aim to “decrease the price of housing and enhance housing provide.”
In urging the White Home to rethink, the advocacy group forecasts new tariffs on Canada, China and Mexico will increase the price of imported materials by $3 million to $4 million a yr and discourage new growth. American shoppers pays the downloaded price in increased house costs.
Dunn mentioned he locations nice religion in Premier Doug Ford and the Council of Federation to defend Ontario’s pursuits in pursuing negotiations and keep away from new tariffs.
“Finally, it is going to be a really political dialogue and a negotiated settlement,” he mentioned, “however what I’m very assured within the paperwork, federally and provincially, to offer one of the best data and finest technique to our elected officers.”
Politically, Dunn wish to see Ottawa do extra to offer help for the business.
He factors to a Quebec-federal program that can make investments $540 million over seven years to prop up that province’s forestry sector. A key part is $100 million in monetary assurances, within the type of loans, to these companies combating money points, particularly these impacted by the softwood lumber dispute.
Federally, the door’s been opened, Dunn mentioned. OFIA and the business has met with the federal authorities to debate such a program.
“We’ve had some good conversations however on one thing like a monetary backstop, we’re awaiting a response.”
Whereas authorities negotiates a path ahead, Dunn notes there are alternatives nearer to house.
OFIA’s message to Queen’s Park is to assist develop the home market by making a home-spun vitality provide chain.
“We import $1.7 billion price of pure fuel into Ontario from the U.S.,” mentioned Dunn.
“There’s an actual alternative to make use of wooden fibre residuals produced on the mill to provide a made-in-Ontario gas,” that’s not depending on U.S. pure fuel.
At present, there are services in Ontario that may devour extra fibre and produce extra electrical energy that the province wants. Many firms are eyeing Ontario to determine biofuel, biogas and biochar services.
The transition could also be a few years down the highway, Dunn mentioned, however “that’s an actual alternative to maintain wooden flowing within the province.”
