Canada's small wool industry, dependent on U.S. mills it can no longer afford to use, is betting on overseas buyers and its own processing capacity instead.
The U.S.'s 50% tariff on Canadian goods, in place since Aug. 22, 2025, has made producers' traditional reliance on American wool processors too costly, pushing shipments toward China, the Czech Republic and Europe instead, The Canadian Press reported this week.
Key Facts
- The U.S. imposed a 50% tariff on Canadian goods, including some wool products, on Aug. 22, 2025, ending duty-free entry under CUSMA.
- All of Canada's $102,737 in greasy wool exports went to the U.S. in 2025, federal trade data show.
- The U.S. also eliminated its $800 duty-free de minimis exemption on Aug. 29, 2025, closing off a channel small shippers relied on.
Canada has never built the industrial scouring and processing capacity the U.S. has, so raw wool has traditionally crossed the border for cleaning before coming home as finished yarn or textiles.
Domestic production stays mostly mid-sized or artisanal, per The Canadian Press, which is why a tariff on the U.S. leg of that trip lands harder here than the dollar figures alone suggest.
Canadian producers reroute raw wool to China and the Czech Republic
More Canadian producers are shipping raw wool to China and the Czech Republic rather than sending it south, Canadian Wool Council chair Matthew Rowe told The Canadian Press.
Rowe called the shift an unfortunate rupture in a trading relationship built over generations, coming just as global wool prices are rising.
"We don't want all our wool in one bag, to modify the expression," he added.
Not every account of the tariff's reach agrees on where it starts. The Canadian Press reported the 50% tariff covers greasy (raw) wool imports as well as some finished products.
Farmtario reported this week that Alberta wool exporter Jeff Jacobs said raw wool still crosses the border tariff-free, and it's finished goods, like his saddle pads, that get hit once they re-enter the U.S. Federal data cited by Farmtario put U.S. wool imports actually caught in the 50% tariff line at about US$86,121 last year, with 48% of that coming from Canada.
An Ottawa retailer drops U.S. wool suppliers
Judy Enright Smith, who owns the Wabi Sabi yarn shop in Ottawa, has stopped stocking U.S. wool labels despite their popularity with some customers and is turning to European and Canadian suppliers instead, she told The Canadian Press.
Her American supplier told Canadian clients this year that ending the relationship would hurt "the little guy," an argument Enright Smith called self-serving.
"At first, it was business. Now, it's personal," she said.
Domestic mills face gaps in processing capacity and parts
One Canadian mill is largely insulated from the tariffs because it processes wool entirely at home.
New Brunswick's Briggs and Little, operating since 1857, buys its wool from a co-operative in Carleton Place, Ontario, and manufactures on-site. Office manager Leah Little noted the mill still depends on U.S.-made machinery parts that are hard to replace domestically, a gap that remains even for a mill largely shielded from the finished-goods tariffs.
Rowe called Briggs and Little more the exception than the rule for the industry.
Shepherd and mill owner Anna Hunter of Long Way Homestead in Ste. Genevieve, Manitoba, wants that exception to become more common.
Hunter, who stopped shipping to the U.S. last year when Washington canceled the de minimis exemption, envisions a network of decentralized regional processing facilities built to handle different wool varieties. "All of a sudden, Canadian wool wasn't moving anywhere than the United States," she said, describing the supply-chain disruption that followed.
Rowe's organization is separately advocating for expanded domestic mill capacity and new supply chains, arguing cross-border reliance no longer makes economic sense at current tariff rates.
