Canadian lumber producers struggle as prices sink below profit margins

Posted on September 26, 2025   |  

Canada’s $63 billion forestry industry is facing pressure from higher U.S. tariffs and weaker American housing demand.

In August, the U.S. Department of Commerce raised combined duties on Canadian softwood lumber to 35.19%, up from 14.5%.

Lumber prices dropped 25% from early August to mid-September before recovering about 10%.

Some British Columbia sawmills have sharply reduced U.S. shipments, with one operator cutting exports from 40% of output to just 10%.

The U.S. housing slowdown, marked by August housing starts at a near five-year low, is adding to the industry’s challenges.

Producers are cutting back: Interfor will reduce output by 12% through year-end, while Domtar will idle its Maniwaki mill in Quebec from October.

Ottawa has introduced a C$1.2 billion support package, including C$700 million in loan guarantees, as the U.S. Fed cut rates by 0.25 points, lowering the 30-year mortgage rate to 6.26%.