Few commodities produced in B.C. are more at risk from U.S. trade protectionism than lumber.
Highly exposed to the American market, B.C. lumber producers already pay billions in anti-dumping and countervailing duties—duties that are expected to increase this year—and could soon face 25-per-cent tariffs on top of that.
The second-most important forestry-based commodity in B.C. is pulp and paper manufacturing, which is, fortunately, less exposed to the U.S., thanks to more diversified markets, and not subject to anti-dumping duties.
And because there is no real substitute in the U.S. for Canadian pulp and paper, B.C. producers should have no trouble passing on 100 per cent of the tariffs to their customers, according to ERA Forest Products Research.
That doesn’t mean B.C.’s pulp and paper sector doesn’t face some existential threats: It’s just that those threats may be more domestic than foreign.
“Our biggest enemy is within,” said BC Pulp and Paper Coalition general manager Joe Nemeth. “Fibre would be a bigger issue than tariffs.”
In recent years, pulp and paper mills have shut down in Mackenzie and Powell River. There are 11 pulp mills left in B.C. and four papermills, which are typically associated with a pulp mill.
These mills are often the single-largest economic anchor for many smaller communities, and when they shut down, it can devastate local economies.
According to the BC Pulp and Paper Coalition, a typical pulp mill directly provides 350 high-paying jobs, and $100 million in annual direct and induced employment wages.
“The economic impact is catastrophic because it’s usually in small communities solely dependent on that pulp mill for their livelihood,” Nemeth said.
Pulp and paper are B.C.’s fourth-most-valuable commodity export—after lumber, metallurgical coal, and copper—accounting for about $4 billion a year in exports.
Like all sectors in Canada, the pulp and paper industry now faces the prospects of tariffs, though the U.S. market accounts for only 15 per cent of B.C. pulp exports.
By comparison, 75 per cent of B.C.’s lumber exports go to the U.S.
Of the $3.3 billion in exports of pulp from B.C. in 2024, 60 per cent or $2 billion went to China, according to BC Stats. Only 15 per cent or $472 million went to the U.S. The remaining 25 per cent went to ASEAN countries ($300 million), Japan ($158 million), India ($137 million), South Korea ($111 million) and the EU ($26 million).
Paper produced in B.C. is more exposed to the U.S. than pulp. In 2022, the U.S. accounted for 72 per cent of B.C. paper exports ($443 million out of a total of $613 million).
But there is less opportunity for substitution for Canadian pulp and paper in the U.S. than lumber, according to ERA Forest Products Research. It predicts tariffs—if they materialize—will simply be passed on to buyers, including large tissue and paper towel makers in the U.S.
“The investment and time required to build new pulp capacity will prohibit domestic substitution in the near, medium and long-term,” the ERA analysis predicts. “Suppliers—chiefly Canadian—should therefore be able to pass on 100 per cent of tariffs to customers, raising costs for tissue, paper and packaging producers and end consumers.”
Canada accounts for about 74 per cent of imports of softwood pulp in the U.S., ERA says, meaning B.C. pulp producers are far more diversified than the national average.
“We’ve got options internationally, and the fact that we can pass on the tariffs, whereas in the U.S., on lumber, we’re not going to be able to pass on the tariffs,” said Kevin Mason, managing director for ERA Forest Products Research.
“The one benefit in B.C., compared to the rest of Canada, is we have quite a bit more opportunity, given our geography. If you’re a mill in Eastern Canada, you can’t really start pivoting to China. The shipping is massively disadvantaged, whereas B.C. has some great geographics for pivoting into the Asia markets.”
Though B.C.’s pulp sector may not be as directly exposed to U.S. trade as lumber, it could be indirectly affected because the industry is so heavily integrated with the sawmilling sector.
About 50 per cent of the cost of making pulp is the fibre, Nemeth said, and about 65 to 70 per cent of that come from wood chips produced from sawmills. The rest comes from pulp logs, the supply of which is heavily reliant on the logging done to supply sawmills.
“When you go log a lumber block, anywhere from 10 to 30 per cent will be pulp wood,” Nemeth explained.
When a sawmill shuts down, pulp mills can lose not only the chips from sawmilling, but the pulp logs that it would typically get from the logging that supplied the sawmill with sawlogs.
“If lumber gets a cold, we get the flu,” Nemeth said.
As sawmills have closed in B.C., and as the access to timber has shrunk, some pulp mills in B.C. have increasing had to rely on imports of pulp logs from Alberta, and Washington and Oregon states, Nemeth said.
“They just cannot get their hands on economic fibre, which is a crime, because we’re buried in the stuff, and it’s all going up in smoke in slash piles,” he said.
“In the majority of cases, people will go in, they’ll pull out all the sawlogs, leave all the pulp wood, tops, branches and everything, and pile them and burn them. Over three million cubic metres of wood goes up in smoke every year. We could salvage about half of that, if you just sorted the pulp wood.”
Nemeth said NDP government polices have essentially cut the annual harvest in B.C. in half over the past few years, from about 60 to 70 million cubic metres per year to 32 million cubic metres in 2024.
“The good news: They have a brand-new minister, Minister (Ravi) Parmar, and he’s trying to fix it,” Nemeth said.
Following on an election promise, Premier David Eby directed Parmar, the new minister for forests, to get to an annual harvest of 45 million cubic hectares.
That would go some way in addressing some of the biggest challenges facing B.C.’s forestry sector, Nemeth said.
“He’s got a big job,” Nemeth said. “But I believe he’s legitimately trying to fix it and try to ramp things up and make that fibre available.”
