Prime Minister Mark Carney unveiled a $1.25 billion support package today to help Canada’s softwood lumber sector confront escalating U.S. tariffs and adapt to a shifting global trade landscape.

“The forest sector is a pillar of Canada’s economy,” said Carney. “In the face of a changing global landscape, we are focused on what we can control – building Canada strong with Canadian expertise, using Canadian lumber.”

The plan offers up to $700 million in loan guarantees to help companies manage financial strain from the U.S. Department of Commerce’s July 25 decision to double duties on Canadian softwood lumber. Another $500 million will fund product and market diversification, increasing domestic processing, supporting Indigenous-led businesses and scaling up value-added production.

The Forest Products Association of Canada (FPAC) welcomed the announcement, calling it a stabilizing force during a challenging time for the sector.

“Encouraging the federal government to get the best trade deal for Canada with our U.S. neighbours continues to be the most important wish of our sector and forestry communities across Canada,” said FPAC President and CEO Derek Nighbor. “As those deliberations continue, today’s measures announced by the Prime Minister are helpful as we try to stabilize the industry for the months ahead and at the same time achieve our shared goals of building more homes, improving competitiveness, increasing production and investment in Canadian operations, and growing new markets for the long-term.”

The federal government will also prioritize Canadian-sourced materials in construction. Through its Build Canadian initiative, it will change procurement rules to require contractors on federal infrastructure and housing projects to use Canadian lumber. The new Build Canada Homes program will finance private-sector homebuilders who use innovative Canadian materials like mass timber and softwood lumber.

Industry Minister Mélanie Joly said the government stands behind the sector as it reinvents itself.

“Today’s announcement showcases the Government of Canada’s steadfast commitment to supporting the Canadian economy and the workers who keep it strong,” said Joly. “By bolstering this key industry and ensuring resilient supply chains, we stand with the industry, its workers, and communities to keep Canada a trusted global trade partner.”

To help workers adjust to industry changes, the government will invest $50 million in training, upskilling, and income supports for over 6,000 affected workers. The funding will flow through Labour Market Development Agreements, and complement expanded Employment Insurance and Work-Sharing programs.

The U.S. remains Canada’s dominant export market for softwood lumber, accounting for nearly 90% of all Canadian softwood exports in 2024. That reliance made Canada vulnerable when the U.S. imposed sharp new tariffs, increasing financial pressure on producers and communities that depend on the sector.