Canada may hold more leverage than expected as officials prepare to revisit the Canada‑United States‑Mexico Agreement (CUSMA) in the New Year, with one leading analyst arguing that America’s dependence on Canadian lumber gives Ottawa a strategic advantage despite the rhetoric.
It comes despite U.S. President Donald Trump insisting that the United States “doesn’t need anything from Canada,” yet Canadian producers continue to supply roughly a quarter of all American lumber consumption, with nearly 90 per cent of Canada’s softwood lumber exports still heading to the U.S. market.
“The good news is they need our wood. We think that there’s an ability to make a deal at some point,” said Daryl Swetlishoff, head of research at Raymond James Ltd., in an interview with Bloomberg late last week.
Already, Canadian softwood lumber used in more than 30% of U.S. housing now faces a combined duty of about 45% after Washington added a new 10% tariff on top of existing anti‑dumping and countervailing measures. While CUSMA preserves tariff‑free access for most goods, softwood lumber remains explicitly excluded — leaving the decades‑long dispute unresolved.
Swetlishoff, however, noted that the relationship cuts both ways: the United States relies heavily on Canadian supply, but Canada is equally dependent on the American market. The scale of Canadian production, he said, makes meaningful diversification to Europe or Asia difficult. “We have a very efficient large industry, and the reality is the U.S. will be the home for the lion’s share of our market for the foreseeable future,” he said.
And whilst U.S. officials could increase harvesting from state‑owned forests in Washington, Oregon, and Idaho, the Government of British Columbia has warned that the United States lacks the processing capacity to replace Canadian imports at scale.
The tariffs have already hit the Canadian industry.
British Columbia — which accounts for half of Canada’s lumber exports to the United States — has seen multiple sawmills close. Swetlishoff said the financial strain is now spreading across the continent: “You’re seeing cash losses throughout the U.S. south, and we’re going to see curtailments manifest themselves in that region as well.”
Despite the downturn, he argued that depressed valuations have created opportunities for investors. Swetlishoff highlighted companies such as Canfor, Doman, and Stella‑Jones, citing strong balance sheets, resilient margins, and the potential to expand through acquisitions. “The bad macro makes their targets quite attractive, and we see them all growing their top and bottom line through mergers and acquisitions over the next 12 to 18 months,” he said.
Already, Ottawa has moved to support the industry. Last month, the federal government expanded its Green Construction through Wood (GCWood) program, committing more than $9 million to projects that accelerate the use of advanced wood products, including mass timber. It has also announced a $1.2‑billion support package for struggling softwood producers, including a $500‑million increase to the Softwood Lumber Guarantee Program, which provides government‑backed loans to help companies manage cash flow during the dispute.
