U.S. tariffs push Canadian wool industry to seek new markets and domestic processing

Canada's wool industry is undergoing a transformation as it navigates steep U.S. tariffs that have severed a key trading relationship. The United States began imposing 50 per cent tariffs on raw, or greasy, wool from Canada and some finished wool products in August. Matthew Rowe, chairman of the Campaign for Wool in Canada and the Canadian Wool Council, said the move has essentially cut off Canadian producers from U.S. buyers. "The tariffs are on our raw wool, which really affects our ability to access processing opportunities because there's parts of our chain that are broken," Rowe said in an interview with BNN Bloomberg on Thursday. He said the industry has traditionally relied on the United States for scouring and other steps to transform wool into high value-added products.

For years, Canadian producers have had to ship their wool to large-scale processing facilities in the United States, which Canada lacks, before bringing it back for use in finished goods. Rowe explained that until larger domestic facilities are built, major Canadian wool producers must now look to the United Kingdom, the Czech Republic or China for processing to avoid the U.S. tariffs. "The tariffs sort of cut off that option for a lot of companies now," he said. The rupture has left some Canadian producers frustrated with their American counterparts and uncertain about a return to normal trade conditions.

The trade tensions have, however, given the industry a renewed focus on expanding both domestically and overseas. This comes at a time when global wool prices and demand for sustainable materials are rising. Earlier this month, the federal government announced an investment of nearly $160,000 over two years to the Canadian Wool Council to help promote Canadian wool internationally. "Canada has high-quality products, like our Canadian wool, to offer the world, and we want to help get more of them into global markets," Minister of Agriculture and Agri-Food Heath MacDonald said in an Oct. 7 statement. The funding is intended to help producers and processors expand their reach, overcome market barriers and capitalize on emerging opportunities.

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Rowe said he is grateful for the federal support, noting that before the council was founded in 2018, "wool hadn't been funded for generations." He said he would like to see this momentum turn into significant investment in Canada's domestic processing capabilities, specifically in the first stage known as scouring, which cleans the wool after shearing. "The first thing you have to do is wash it," said Rowe. "From there you can comb it, you can align it in different ways to turn it into yarn, to turn it into felt, the yarn can then become cloth, but it all starts with that large-scale scouring, and that's something Canada currently lacks."

Another proponent of Canada's wool industry is King Charles III, who has campaigned globally for the preservation of traditional materials and craftsmanship. "His Majesty is patron of the Campaign for Wool in Canada," Rowe explained. "It's really helpful to have that kind of high-profile endorsement." Rowe also referenced the King's past remarks on the material. "The King once said that if the smartest scientist with the most well-funded lab was to come up with a miracle fibre, it still wouldn't be as good as wool for all that it gives us," says Matthew Rowe.

With files from BNN Bloomberg