Surveys Point to Tariff Risks for Canadian Wood

Canadian wood manufacturers are among the industries directly exposed to the new U.S. Sec. 338 tariffs, according to survey results released by Canadian Manufacturers and Exporters (CME) and the Canadian Federation of Independent Business (CFIB).

CME’s analysis identifies wood and articles of wood as one of the largest Canadian product groups threatened by the 50 per cent tariffs. Exports are heavily concentrated in the U.S. market, leaving Canadian manufacturers particularly exposed to changes in cross-border trade conditions.

Among manufacturers subject to Sec. 338 tariffs, 78 per cent expect at least a moderate impact, including 19 per cent anticipating a significant impact and 30 per cent anticipating a severe impact. Only seven per cent expect no impact.

The expected effects are concentrated in sales and profitability. Eighty-six per cent of affected manufacturers anticipate reduced exports to the United States, while 85 per cent expect lower sales or lost customers and 85 per cent foresee lower profit margins. Another 73 per cent anticipate delayed or cancelled orders.

Manufacturers are also preparing to scale back on operations. CME found that 61 per cent expect to delay or cancel investments, 56 per cent anticipate reducing production and 51 per cent foresee cuts to employment, hours or shifts. Meanwhile, 53 per cent expect to raise prices, while 46 per cent said they may move some production to the U.S.

Financial resilience is weakening, too. Twenty-seven per cent of manufacturers said they could sustain current operations for no more than six months without additional government support, up from five per cent in CME’s previous survey. The share reporting more than 18 months of runway fell to 16 per cent from 28 per cent.

CFIB’s separate survey of 1,545 Canadian independent business owners and decision-makers points to similar pressure among companies engaged in cross-border trade. Forty-six per cent of exporters to the U.S. said one or more of their products were affected by the new U.S. tariffs, while 49 per cent of importers from the U.S. reported exposure to Canadian retaliatory tariffs.

Among businesses able to quantify the effect, CFIB reported a median monthly financial impact of $65,000. That figure rose to $200,000 for exporters and stood at $55,000 for importers. However, 72 per cent of respondents said it was still too early to calculate the financial impact.

Businesses are already changing their operating plans. Thirty-two per cent are reducing tariff-affected purchases or imports, 31 per cent are switching suppliers or sourcing locations, 24 per cent are delaying or freezing hiring, and another 24 per cent are delaying or cancelling investments.

For the wood sector, CME provides the clearest evidence of direct exposure by identifying wood products among tariff-affected export categories. CFIB adds evidence of broader supply chain and cost pressures affecting exporters and importers. Neither survey provides a wood sector-specific breakdown of respondent results, so the manufacturing and small business percentages should not be interpreted as measurements for the wood industry.