This piece was originally published in Policy Magazine: Beyond Tariffs: A Policy Prescription for Bolstering Canada’s Forest Economy - Policy Magazine
Canada’s forest sector stands at a pivotal moment. And while Prime Minister Mark Carney’s recent softwood lumber support package offers a welcome first step toward stabilizing the sector, more can be done to put Canadian forestry on a permanent and sustainable path to growth.
Canadian forestry has the potential to grow jobs and opportunities in rural and northern Canada, provide domestic wood for constructing affordable housing, and use forest management practices—including Indigenous practices of prescribed burns—to help reduce the risk of severe wildfires.
But persistent trade uncertainty — including the increased duties on softwood lumber exports to the U.S. — threatens both the thousands of jobs at risk as trade negotiations continue and Canada’s ability to operate at scale.
Our trade environment is volatile, with anti-dumping and countervailing duties on Canadian lumber now exceeding 35%. President Donald Trump’s Section 232 “national security” investigation into U.S. lumber imports could impose additional tariffs and extend to other Canadian exports such as pulp and paper, only adding to unnecessary uncertainty.
Canada does forestry and lumber products exceptionally well — the sector is a foundational element of our economic DNA. Which is why Canadian lumber exports are not new to being targeted.
And although Canadian producers have faced rising duties since 2017, it is European industry and workers, not American producers, who’ve been benefiting from increased U.S. market share.
In 2017, U.S. producers supplied 69% of domestically used lumber, while Canada supplied just under 30%. Last year, Canadian exports to the U.S. fell to just under 24%, with American production remaining flat at 70%, and European exports filling the gap.
Persistent trade uncertainty — including the increased duties on softwood lumber exports to the U.S. — threatens both the thousands of jobs at risk as trade negotiations continue and Canada’s ability to operate at scale.
But as Canada works to build a stronger, more secure North American economy, today’s unprecedented trade tension is about more than just conventional bilateral irritants—it poses a serious threat to Canadian jobs and generates avoidable costs for American consumers.
Amid these threats and despite recent declines, Canadian forestry has a real opportunity to shift from contraction to growth, driven by rising global demand for wood products and Canada’s abundant forests, which are home to more than 8,000 trees per person, representing 9% of the world’s forests.
Forestry remains a lifeline for hundreds of communities across this country, supporting over 200,000 direct jobs, nearly 200,000 more indirect jobs, and generating $87 billion in annual economic activity. It also actively contributes to Indigenous reconciliation, providing jobs for 11,600 Indigenous Peoples across more than 400 communities, and supporting roughly 1,400 Indigenous-owned businesses that are the backbone of the Indigenous economy.
Over the past two decades, First Nations’ forest tenure holdings have expanded by 135%, now covering over 17 million hectares—or about 7.5% of Canada’s managed forest area. Most Indigenous businesses employ 10-30 people, with many of those businesses earning over $1 million annually. Their integration of Indigenous knowledge with modern forestry science contributes significantly to Canada’s economy.
To not only defend the socioeconomic dividends of our long-term investment in Canadian forestry but to guarantee a stronger future for Canada’s forestry workers and communities, the country must secure the best trade deals at the Canada-U.S. negotiating table.
At the same time, the federal government must focus on controllable factors, including the use of more Canadian wood in federal procurement, the acceleration of national homebuilding programs, and an increased investment in sector innovation and export markets.
The next phase in Canada’s industrial strategy should support the modernization of aging pulp and paper mills, the approval of investment tax credits for biomass used for heat and electricity, the growth of the forest bioeconomy, and the reform of regulatory duplication and overlap with provincial governments.
Indigenous Inclusion and Sustainability
Indigenous inclusion and sustainability must underpin these efforts. Indigenous communities, so many of which coexist with, and are stewards of, Canada’s forests, play a vital role.
Policymakers should look to successful Indigenous forestry models like Meadow Lake Tribal Council (MLTC) in Saskatchewan, which has increased revenues from $60 million to $148 million over four decades. MLTC’s forest enterprises fund community projects, create employment, and offer training in forestry.
Indigenous entrepreneurs face major hurdles, including recruiting qualified workers and accessing capital, which limit their operational capacity. Sector-specific support and tailored programs are essential. Governments must prioritize Indigenous involvement in forestry procurement strategies.
Many Indigenous communities lack the capital for forest ventures. Federal and provincial Indigenous loan guarantee programs should adapt to meet specific sector needs. High thresholds often exclude small, sustainable forestry projects, unlike larger investments in energy and mining.
Indigenous forest businesses can play an important role in sustainable development. They are able to create products and services through sustainable practices. Advancements in silviculture provide additional support for these initiatives.
Enhancing Regulatory Efficiency for Investment and Growth
More than 90% of forest land in Canada falls under provincial jurisdiction, whereby management plans incorporate ecosystem values and Indigenous and non-Indigenous community engagement. Yet, federal overreach—including overlapping regulations and intervention in those provincially approved forest management plans—creates uncertainty and hampers strategic investment. This environment hinders productivity and competitiveness, especially at a time when global demand for sustainable forest products is rising and Canadian communities face unprecedented trade risks.
Canada must strengthen itself by adopting a streamlined, outcomes-based regulatory framework that leverages provincial standards and reduces unnecessary duplication. This approach will help protect the environment, support forest-dependent communities, and enhance Canada’s competitiveness within the global economy.
Four Steps to Smarter Regulation
Prime Minister Carney’s mandate calls for a new governance approach that boosts productivity, removes trade barriers, and attracts private investment. To achieve this, Canada should:
1. Recognize provincial standards that meet or surpass federal requirements, expanding Bilateral Equivalency Agreements, particularly for fish habitat, species at risk, and pollution control.
2. Adopt a backstop model where federal intervention occurs only if provincial standards fall short—similar to the existing Output-Based Pricing System—and apply it to mechanisms such as the Pulp and Paper Effluent Regulations.
3. Implement a one-window regulatory system for reporting and permitting, inspired by Ontario’s One-Window model, to eliminate redundancies and improve efficiency for industry and government.
4. Develop a joint Indigenous consultation process that replaces separate federal and provincial consultations to reduce confusion, fatigue, and capacity strain while respecting the duty to consult.
This is not about deregulation; it’s about smarter regulation—an approach that leverages existing systems, reduces duplication, and focuses on outcomes. It aims to do more with less, protect the environment, support forest-dependent communities, ensure Indigenous participation, and bolster Canada’s global competitiveness.
Canada’s forest sector already has the expertise, the infrastructure, and the proven commitment to sustainability. What it needs is the regulatory framework to better enable its full potential.
