GreenFirst Forest Products and NFI Group: Tariff Vulnerability vs. Resilience in Canadian Manufacturing

The U.S.-Canada softwood lumber dispute, now spanning over four decades, has reached a critical inflection point. With tariffs on Canadian imports surging to over 45% by October 2025, capital-intensive Canadian manufacturers face a stark test of their operational and financial resilience. This analysis examines how GreenFirst Forest Products and NFI Group, two pillars of Canada's industrial landscape, are navigating the dual pressures of trade policy shifts and domestic production constraints.

The Tariff Tsunami: A Structural Challenge for Canadian Exports

The U.S. Department of Commerce's latest administrative review imposed a 35.16% duty rate on Canadian lumber, compounding an existing 35% tariff and pushing total costs to unsustainable levels for exporters, according to a GreenFirst Reports Financial Results for the Third Quarter of 2025 report. For GreenFirst, which operates four sawmills and manages six million hectares of FSC-certified Ontario forests, these tariffs have directly eroded profitability. In Q3 2025, the company reported a net loss of $57.4 million, driven by a $33.8 million duty expense and $5.9 million in accrued interest, according to the same report.

Meanwhile, NFI Group-a manufacturer of transit buses and school coaches-has adopted a more proactive stance. Despite a $140.9 million net loss in Q3 2025, the company's Adjusted EBITDA surged 52.1% year-over-year to $80.9 million, reflecting improved delivery performance and liquidity growth of 169% to $386 million, according to an NFI Announces Third Quarter Results announcement. NFI's strategy hinges on passing tariff costs to customers through contractual price adjustments, a tactic that has cushioned its margins against the 10% tariff on U.S. bus imports effective November 1, 2025, the announcement notes.

Operational Resilience: NFI's Strategic Adaptation

NFI Group's ability to absorb and redistribute tariff costs underscores its structural advantage in capital-intensive manufacturing. By leveraging long-term contracts and supplier negotiations, the company has maintained a 45% gross margin in its transit bus segment, despite the new 10% tariff, the announcement notes. This contrasts sharply with GreenFirst's struggles to offset costs in a commodity-driven lumber market, where pricing power is limited by U.S. demand volatility and domestic production bottlenecks.

NFI's liquidity position further amplifies its resilience. With $386 million in cash reserves, the company is well-positioned to invest in automation and supply chain diversification, mitigating long-term exposure to trade policy shifts, according to the announcement. For instance, NFI has already begun sourcing components from U.S. suppliers to reduce import dependency, a move that aligns with its "tariff pass-through" strategy, the announcement notes.

GreenFirst's Capital Allocation Dilemma

GreenFirst's Q3 2025 results reveal a company caught in a crossfire of external pressures. While the company is modernizing its Chapleau mill with a new saw line-a $50 million investment expected to boost productivity by 20%-tariff-related uncertainties have constrained capital allocation flexibility, according to the GreenFirst Reports Financial Results for the Third Quarter of 2025 report. The company's net sales fell 17% year-over-year to $70.2 million, reflecting weaker U.S. housing demand and lower realized prices, the report notes.

Unlike NFI, GreenFirst lacks the pricing leverage to fully offset tariff costs. Its reliance on the softwood lumber market-a sector where U.S. domestic production remains constrained by species availability and labor shortages, as noted in a Why higher tariffs on Canadian lumber may not be enough ... analysis-leaves it exposed to cyclical demand swings. The company's upcoming earnings call on November 12, 2025, will be critical in assessing whether it plans to pivot toward higher-margin paper products or diversify into non-tariff-sensitive markets.

Broader Implications for Canadian Manufacturers

The divergent trajectories of GreenFirst and NFI highlight a broader challenge for Canadian capital-intensive industries: the need to balance short-term cost management with long-term strategic adaptation. While NFI's contractual pricing power and liquidity buffer offer a blueprint for resilience, GreenFirst's struggles underscore the limitations of operating in a commodity sector with limited pricing flexibility.

For investors, the key differentiator lies in a company's ability to restructure supply chains and diversify revenue streams. NFI's proactive supplier engagement and capital allocation discipline position it as a relative outperformer in a high-tariff environment. GreenFirst, meanwhile, faces an uphill battle to justify its capital expenditures against a backdrop of persistent trade uncertainty.

Conclusion

As the U.S. continues to weaponize tariffs to bolster domestic production, Canadian manufacturers must evolve beyond traditional export models. NFI Group's strategic agility and GreenFirst's operational investments represent two sides of the same coin: one leveraging contractual leverage and liquidity, the other betting on modernization. The coming months will test whether GreenFirst can replicate NFI's playbook-or whether its reliance on a volatile commodity market will leave it vulnerable to further trade policy shocks.