U.S. 50% duties on covered Canadian pulp and paper products meet Canada's new tariffs of up to 50% on U.S. tissue, paper and dissolving pulp

As new U.S. and Canadian tariffs take effect this month, the North American tissue and paper complex has become one of the most visible battlegrounds in the escalating trade dispute, with 50% U.S. duties hitting covered Canadian pulp and paper products and Canadian counter-tariffs of up to 50% targeting U.S. tissue, paper and dissolving pulp.

U.S. section 338 duties take effect: 50% on covered canadian pulp and paper products

The flashpoint for pulp and paper came after the U.S. imposed additional duties under Section 338 of the Tariff Act of 1930 on covered Canadian goods, with the measures taking effect Aug. 22. Among the affected products are:

●      Chemical bleached softwood pulp, including NBSK, a key strength fiber used in U.S. tissue and towel production.

●      "Toilet or facial tissue stock" and other specified household and sanitary paper products used by U.S. converters.

The distinction between the tariff classification and the commercial product name is important: the U.S. measure applies according to the relevant tariff classifications rather than simply to anything sold commercially as "NBSK."

Canada hits back: tissue, paper and dissolving pulp in the crosshairs

Ottawa's retaliation targets a range of U.S. pulp, paper and converted-paper products. In the pulp and paper sector, the Sept. 8 Canadian schedule includes:

●      50% on HS 4702.00.00 – chemical wood pulp, dissolving grades, used to produce rayon, acetate and other cellulose derivatives.

●      50% on HS 4803.00.00 – toilet/facial tissue stock, towel/napkin stock and similar household or sanitary paper, including cellulose wadding and webs.

●      25% on finished toilet paper (HS 4818.10.00).

●      25% on facial tissues and hand towels (HS 4818.20.00).

●      50% on paper tablecloths and serviettes (HS 4818.30.00).

●      50% on other household and sanitary paper articles (HS 4818.90.00).

●      50% on a range of printing, writing and packaging grades, including certain coated graphic papers and boards, envelopes, corrugated boxes and paper sacks.

Kraft pulp is a notable exception

One of the most significant details for the pulp industry is what does not appear on Canada's Sept. 8 list. Kraft pulp under HS 4703 is not listed among the new Canadian surtaxed lines, while dissolving pulp under HS 4702 is subject to a 50% surtax. This means that, under the published Sept. 8 schedule, U.S.-origin kraft pulp is not subject to the new Canadian surtax, even as covered Canadian chemical bleached softwood pulp entering the U.S. faces the U.S. Section 338 duty.

For tissue producers and pulp suppliers, the distinction between HS 4702 dissolving pulp and HS 4703 kraft pulp is therefore particularly important.

Industry reaction: uncertainty and delayed decisions

The tariff shock is also affecting corporate planning. Kruger Products, producer of Scotties facial tissue as well as Cashmere, White Swan and Purex toilet paper, has cited an uncertain economic environment, including tariffs and uncertainty around the Canada-U.S.-Mexico trade framework, as factors affecting investment decisions.

The broader concern for tissue manufacturers is the potential combination of higher fiber costs, changing sourcing strategies and pressure on margins. Canadian NBSK is deeply integrated into the North American tissue supply chain, meaning manufacturers may have to consider alternative fiber sources or absorb some of the additional cost.

Competitive pressure could limit how much of the increase is passed through immediately, but prolonged tariffs could eventually put pressure on manufacturing costs, tissue prices and product economics.

What's taxed, what's not: a quick reference for mills and converters

By the numbers: U.S. toilet paper imports from Canada

●      2024: The U.S. imported about $328 million of finished toilet paper from Canada (HS 4818.10), according to UN Comtrade/World Bank data.

●      2025: Total U.S. toilet paper imports reached about $575.1 million (roughly 310,555 metric tons), with Canada accounting for about $383.4 million and 166,227 metric tons—roughly two thirds of import value and about half of import volume.

●      Share of U.S. market: Imports represent only about 5% of total U.S. toilet paper consumption (2024), with the vast majority produced domestically.

Canada is the largest foreign supplier of U.S. toilet paper, but the U.S. market is overwhelmingly supplied by domestic mills. For toilet paper, the immediate tariff risk is therefore more likely to be more about marginal cost and pricing power rather than a direct supply shortage.

What to watch next

Negotiations: Both sides remain under pressure to resume negotiations. Any agreement could quickly change which pulp, paper and tissue products remain subject to elevated duties.

Fiber sourcing: U.S. tissue manufacturers will be watching the availability and pricing of Canadian NBSK particularly closely. A prolonged tariff could encourage changes in fiber sourcing and furnish strategies.

Tissue pricing: The key question for converters and retailers will be how much of the additional cost is absorbed by manufacturers and how much ultimately reaches customers.

Market response: Tissue pricing, brand availability, mill utilization and cross-border trade flows will be important indicators of the longer-term impact.