OTTAWA — For the past six months, Luke Elias, the president at Muskoka Cabinet Company Inc., says his workers have been working only two or three days a week.

The company based in Eastern Ontario, which has been making custom wood cabinetry for nearly four decades, is one of the thousands of companies in the kitchen cabinet industry that have been crippled by cheap imports coming from primarily southeast Asian countries.

Elias said his company, like many others, has been working at less than half of its capacity, and he has had to lay off 30 out of 70 workers.

“Not only is our survival at stake, but we can’t even think about investing and growing because of the imports,” he said in an interview with National Post.

“This is just unfair trading — below fair market value pricing. It’s just predatory, and we’re just asking for a level playing field,” he said.

On Friday, Minister of Finance François-Philippe Champagne announced a 25 per cent surtax on imports of certain wood cabinets and vanities, effective immediately, to remain in place for a maximum of 200 days. That tariff will not apply to products manufactured in the United States, Mexico, Israel and other developing countries.

The surtax is meant to be a temporary measure to help stabilize Canadian businesses while the Canadian International Trade Tribunal (CITT) completes its inquiry into the trade conditions that are impacting Canadian manufacturers of wood products, including wood cabinets, hardwood flooring and storage furniture.

The tribunal has until January 15, 2027, to submit its findings.

Dan Kelly, president and CEO of the Canadian Federation of Independent Business, said the surtax is a very important first step in helping address dumping.

“Freer trade is better trade, but tariffs are an absolutely important part of trade policy when unfair trading practices are engaged in, and every country, including Canada, has used them on and off over decades to try to address problems in the system,” he said.

The Canadian Wood Products Alliance (CWPA), which represents manufacturers like Muskoka Cabinet Company Inc. that produce finished wood products including cabinets, furniture, flooring, and panels, said in an unattributed statement this surtax was “very welcome news” and a “much-needed step in the right direction.”

But the organization said it remained concerned on two main fronts.

First, the CWPA said that several types of wood products, such as flooring and furniture other than cabinets and vanities, have been excluded from the tariff while many manufacturers are also struggling. Second, it said the 25 per cent tariff should be considered a starting point if the government wants to stop the flow of cheap imports.

Kelly said the federal government faces a balancing act, noting that Canadian consumers may be in favour of lower costs.

“It’s not that anybody should be discouraged from taking advantage of lower prices,” said Kelly. “It’s just that are we being fair to all players, including our domestic manufacturers.”

Elias, who is not only a member of the CWPA but also the president of the Canadian Kitchen Cabinet Association, said these provisional tariffs, while welcome by the industry, are arriving too late for many businesses which have already closed shop.

“If (the government) had acted when the application for this investigation was first accepted, it would have made a huge difference,” he said.

He however insisted that the industry is “very appreciative” of these tariffs.

“We could have used them six months ago, but we’re very thankful.”

Elias said the difficulties for the wood industry started in 2019 when the United States imposed tariffs on China for kitchen cabinets, so they started to divert their stock to Canada which was an “easy target.” The situation has only worsened as the Trump administration, in its second term, started putting more and more tariffs worldwide.

Kelly said Canada is getting “sideswiped” by U.S. tariffs on other countries.

“U.S. tariffs are causing other countries to see their U.S. market share decline, and therefore they’ve got all this extra product and they’re selling it into the Canadian marketplace, perhaps below cost, just to get rid of it,” he said.

The imports of cheap product are coupled with the ongoing U.S. tariffs of 25 per cent on Canadian kitchen cabinets and vanities, which are set to increase to 50 per cent in 2027. Even more wood products could be struck with an additional 50 per cent tariffs on August 19 if the federal government does not come to an agreement with the U.S.

Elias said Canadians don’t often hear about the wood product industry as much as the steel and aluminum industries, for instance, but he said having more wood factories shut down or partially shut down are already having an impact in rural communities across Canada.

“It just affects the local economy. It affects our suppliers. It affects all the businesses that are around us that we purchase from and our employees purchase from,” he said.

Elias said that while his company stopped exporting to the U.S. right after COVID hit, the industry as a whole could be impacted by additional U.S. tariffs on wood products.

“The more the exporters are having a tougher time selling into the United States, they’re going to try and ramp up their efforts in Canada,” he said.

“So, we’ll all be fighting for the same shrinking pie in Canada.”

National Post

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