Posted originally on CTH on March 23, 2026 | Sundance

This is one of those small stories that carries the potential for significant domestic economic gains.

As many are aware, the U.S. imports a lot of softwood lumber from Canada. Combined with the energy products the lumber sector represents the top two U.S. imports from Canada.  With Venezuela now potentially positioned to replace the former, USDA Rural Development now stimulates domestic lumber development potentially positioned to replace the latter.

Taken as a whole, these two approaches significantly weaken the Canadian leverage that could be deployed in a Free Trade Agreement negotiation.  Assuming, of course, the USMCA is dissolved in favor of two bilateral FTAs.

USDA Press Release – At the Advanced Bioeconomy Leadership Conference today, U.S. Department of Agriculture Administrator for the Rural Business and Cooperative Service J.R. Claeys announced the U.S. Department of Agriculture is guaranteeing $115.2 million across eight states through the Timber Production Expansion Guaranteed Loan Program (TPEP) to ensure sawmills and other wood processing facilities have the necessary funding to establish, reopen, expand, or improve their operations.

Today’s announcement includes recipients in the states of California, Idaho, Kansas, Louisiana, Maine, Oklahoma, Virginia, and Wisconsin.

These investments represent a commitment by the Trump Administration to expand American timber production by 25%, reduce wildfire risk, and save American lives and communities by strengthening domestic wood processing capacity.

“We cannot allow wildfires to devastate and destroy our rural communities,” said Administrator Claeys. “That’s why the USDA is taking bold action to stop the destruction of our forestlands by investing in sawmills and wood processing facilities that support sustainable timber harvesting. These actions strengthen local businesses, support rural prosperity, and create jobs for hardworking Americans.” (source)

This is not to say that expanded U.S. sawmill production would completely eliminate Canadian softwood lumber imports. However, it does create inventory and a stronger domestic supply chain that would diminish any applied leverage that Canadian trade negotiators would seek to deploy.

Without pipelines flowing East or West, Canada is stuck pumping their heavy oil south for processing.  Nothing about that is likely to change in the next few years, even if Canada abandoned their climate change policy (highly unlikely).

Then comes the cross-border auto manufacturing industry, and the realization that -sans USMCA- both U.S. and Japanese automakers are likely to stick with the manufacturing center where their greatest customer base exists, the USA.

Now overlay softwood lumber, and you can see the top three economic dependencies of the U.S and Canada are slowly being uncoupled, simultaneous with the trilateral USMCA provisions being reviewed starting with the U.S. and Mexico having direct conversations.

We keep watching.