Ontario's forestry sector can't withstand more tariffs, says industry association

Northern Ontario's forestry industry says it welcomes a 30-day reprieve from more U.S. tariffs, which it says could decimate the sector.

"I can assure you there is not one member company in our organization that could withstand a persistent and prolonged 25 per cent tariff at the border," said Ian Dunn, president and CEO of the Ontario Forest Industries Association.

Dunn said a global tariff on Canadian exports to the United States, in addition existing tariffs on softwood lumber would be unsustainable for sawmills and the pulp and paper industry, which relies on those mills.

In August, the U.S. raised tariff rates on imports of Canadian softwood lumber products from eight per cent to 14.5 per cent.

"By this time next year, they should be around 30 per cent. So combined 40 to 60 per cent duties on softwood lumber ? That's effectively going to wipe out all U.S. shipments," Dunn said.

Dunn said it's a challenge for the forestry industry to reduce its dependence on the U.S. due to proximity. But he said there are things that can be done in Canada to increase domestic demand in case of future tariffs.

Some suggestions from the industry include changes to the building code to allow for taller buildings using lumber, and more biomass energy projects, essentially producing electricity by burning wood.

Mining suppliers at risk

Priya Tandon, president of the Ontario Mining Association, said smaller mining suppliers would be most at risk from tariffs on Canadian exports.

"The space is so integrated with the U.S. and there'd be increased costs on both sides," she said.

Don Bertrand, the owner of X-Glo North America, a Sudbury-based company that exports LED strip lighting for mines and tunnels, said his company is already being affected by U.S. tariffs on Chinese exports.

That's because his products are manufactured in China.

"It's quite concerning for a newer startup, in business for five years," Bertrand said.

Bertrand said around 70 per cent of his customers are based in the U.S.

"A lot of the U.S., they don't understand the whole tariff and how it's actually going to affect them," he said.

"A lot of them think that the Canadian companies or the government are the ones paying these tariffs. They don't realize that it's the end user of the product that's going to actually take the brunt of that new tariff rate."

For his customers in Canada, Bertrand said concern about tariffs has weakened the Canadian dollar, which makes purchases more expensive for them.

"We quoted that project [in Montreal] last, I think it was November, and we had to re-quote it last week with an additional four to five per cent, just because of our dollar getting weaker," he said.

For Ontario's mining industry as a whole, Tandon said a 30 day reprieve on tariffs is welcome, but the sector needs to expand more to other markets to reduce the impact of any potential tariffs on U.S. exports.

"It's important that Ontario diversifies its markets. We, you know, we need to look to the EU, to Japan, and maybe they'll pay a premium for ethically sourced critical minerals," she said.