Canada Reveals C$1.2 Billion Aid Package for Lumber Industry Amid U.S. Tariff Hike

In response to sharply increased U.S. duties, Canada is stepping in to support its softwood lumber sector with up to C$1.2 billion ($870 million) in aid. Prime Minister Mark Carney announced the relief plan during a press conference in British Columbia, highlighting the growing strain in cross-border trade relations with the United States.

The aid package comes as the U.S. escalates its long-standing trade dispute with Canada over softwood lumber, a key component in residential construction. The recent move by U.S. President Donald Trump to significantly raise tariffs has only deepened the divide.

Relief

Canada’s relief plan is two-pronged. First, Ottawa will offer C$700 million in loan guarantees to help lumber producers maintain liquidity. Second, another C$500 million will be funneled into innovation and market diversification to reduce reliance on U.S. buyers.

The goal, Carney said, is not just to soften the blow from American tariffs, but also to prepare the industry for a more resilient future. “We’re standing with our workers and our industry,” he noted, emphasizing the importance of long-term competitiveness.

Dispute

The Canada-U.S. softwood lumber dispute is decades old. Washington accuses Canada of unfairly subsidizing its timber industry, which allegedly allows producers to undercut American companies. Canada insists it plays fair and denies all dumping allegations.

Tensions rose last month when the U.S. Commerce Department announced it would nearly triple anti-dumping duties on most Canadian softwood imports—from 7.99% to 20.56%. Additional countervailing duties are expected to push the total tariffs to around 34.5%, up from 14.5%.

Trump’s administration argues these measures protect American industry. However, Canadian officials view them as unjustified and damaging to both sides, especially as the countries were trying to renegotiate parts of their economic and defense partnership.

Impact

The softwood lumber industry is vital to Canada’s economy, particularly in provinces like British Columbia and Quebec. It supports tens of thousands of jobs, especially in rural communities, and generates billions in annual exports.

With the U.S. buying the bulk of Canada’s softwood lumber, rising tariffs pose a significant threat. Smaller producers, in particular, risk going under without immediate support. The new loan guarantees aim to give these businesses breathing room until the trade environment stabilizes.

Here’s a quick breakdown of the support plan:

Aid Component	Amount (C$)	Purpose
Loan Guarantees	700 million	Liquidity support for producers
Innovation & Diversification	500 million	Develop new markets and products
Total Aid	1.2 billion

Politics

This trade fight adds another layer of friction to Canada-U.S. relations. Trump recently raised tariffs on several Canadian imports to 35% after negotiators failed to finalize a new agreement by the August 1 deadline.

The lumber dispute has now become a symbol of broader tensions between the two countries, as they navigate a shifting global economy and strategic realignment.

Future

Canadian officials hope the aid package will help stabilize the industry in the short term while building a foundation for long-term independence from the volatile U.S. market. This includes looking into new international partners and investing in value-added wood products.

Still, without a resolution to the trade conflict, many worry that the damage may linger. Ottawa is continuing to challenge U.S. duties at the World Trade Organization and under USMCA dispute mechanisms.

Whether the relief plan is enough remains to be seen—but for now, it offers a lifeline to an industry under siege.

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