Canada unveils forest sector action plan to counter tariffs and mill closures

Published on June 8, 2026 Time: loading...

Rusted orange logs piled along a calm harbor with a city skyline and cranes in the background, and a small boat on the water.

Canada has announced a comprehensive Forest Sector Action Plan to strengthen the country’s timber industry, which faces mounting pressure from U.S. tariffs and mill closures. The plan, revealed on June 4, 2026, by Tim Hodgson, Canada’s Minister of Energy and Natural Resources, aims to ensure the long-term viability of the sector. It focuses on four key pillars: wood fibre supply, modernization, market expansion, and support for workers.

The action plan is developed in close coordination with provincial and territorial governments and Indigenous partners. This collaborative approach is crucial since provinces and territories control nearly 88 percent of Canada’s forests. By leveraging regional input, Ottawa seeks to implement strategies that are practical and locally supported rather than top-down mandates.

The Forest Sector Action Plan builds on the findings of the Canadian Forest Sector Transformation Task Force, which released its final report on June 3, 2026. Alongside the report, the government allocated nearly C$130 million to support 56 forest sector projects nationwide. These projects range from mill upgrades to biorefineries, targeting both productivity improvements and innovation.

Canada’s forest sector is a significant economic driver, employing nearly 200,000 people, including more than 11,000 Indigenous workers. The sector contributes over $20 billion annually to the national GDP, underscoring its importance to the broader Canadian economy. Maintaining competitiveness and protecting jobs are therefore central objectives of the action plan.

The first pillar, wood fibre supply, ensures reliable access to low-cost timber. Federal funding is directed toward regions that can demonstrate sustainable, long-term fibre availability. Pilot programs for new tenure models will be rolled out with willing provincial and Indigenous partners. These models aim to stabilize supply and provide predictability for investors and mill operators.

Modernization forms the second pillar. Investment incentives include contracts for difference and offtake agreements that reduce risk for major projects. Funding ranges from $250 million for mill upgrades to over $1 billion for larger facilities. Biorefineries, designed to produce value-added products, may require up to $3 billion in investment. A proposed transformation fund would provide loans and guarantees for these initiatives. Mills that anchor regional industry clusters are prioritized to maintain local economic stability.

Market expansion is the third pillar. Canada plans to improve rail and port capacity to facilitate timber exports. A unified Canadian forest products brand will be promoted in global markets. Inbound trade missions and marketing campaigns aim to enhance international recognition and competitiveness. These efforts are expected to counter U.S. trade measures and open new opportunities for Canadian timber.

The final pillar addresses workers. Training programs for architects, engineers, and designers in structural wood will be offered to build expertise in modern wood construction. Additionally, funding will be available for transition support in regions affected by mill closures or restructuring. Ensuring fair labor practices, job retention, and community resilience are key social objectives embedded in the plan.

The announcement comes amid ongoing U.S. trade pressures, which have restricted Canadian timber exports and contributed to structural challenges within the sector. Earlier actions by the U.S., including opening millions of hectares of national forest to domestic logging, have intensified competition for Canadian products. Ottawa emphasizes that while trade barriers exacerbate difficulties, the deeper issues in the Canadian forest sector are structural.

Minister Hodgson described the plan as a necessary pivot rather than a routine reform. He highlighted that mills are closing, jobs are being lost, and communities dependent on forestry are struggling. The government’s goal is to implement a formal Forest Sector Strategy by the end of 2026. This strategy will integrate federal initiatives with provincial and Indigenous actions, creating a coordinated national framework for sustainable and resilient forestry.

Canada’s Forest Sector Action Plan addresses critical industry challenges through investment, innovation, and workforce support. By stabilizing wood fibre supply, modernizing mills, expanding markets, and protecting workers, Ottawa aims to safeguard the sector’s long-term economic and social contributions. The plan underscores the government’s commitment to preserving one of Canada’s most vital industries while responding proactively to global trade pressures.