Trump said we don't need Canada's lumber. So a good incentive and subsidy to compete against the highly subsidized Canadian lumber industry for home construction is needed. What would Canadians do when they have no one to export their timber to?

So no, Canadian lumber is not “heavily subsidied” as stated in your question. That is a lie.

And as far as the other part of your question goes, China would love our lumber. All of it. The only reason they don't buy more is we currently export most of what is harvested to the US.

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Each time the US slapps subsidies on Canada, Canada appeals to the WTO under the terms of NAFTA / USCMA, and the WTO does a review and ends up throwing the claim out.

The basis for this claim is that the majority of US lumber is harvested from private lands, and the majority of Canadian lumber comes from crown owned government land. As a result the sumpage fees are higher in the US. The American forestry companies claim this is a government subsidy.

So don't worry about Canada. Canada will be fine. It is the US that Trump is tanking.

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To Canada, this is no more a subsidy than cheap electricity is in Quebec making cheaper Aluminium. The cost of electricity is cheaper because of the abu dant hydroelectric sources which are cheap to operate, unlike the US that burns coal and oil to create electricity. The raw material is just cheaper.

And the WTO agrees with Canada.

“Unfair trade by Canada to the tune of 34.45% in the U.S. softwood lumber market substantiates yet again the everyday egregious harm to the U.S. industry by Canada’s abusive dumping and subsidies practices. These unfair trade practices are designed by Canada to maintain an artificially inflated U.S. market share for Canadian products and force U.S. companies to curtail production, thereby killing U.S. jobs,” stated Andrew Miller, Owner/Chair of Stimson Lumber Company and Chairman of the U.S. Lumber Coalition.

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The US Lumber Coalition has repeatedly claimed that the Canadian lumber is unfairly subsidied. As a result they lobby the US government to apply tariffs on lumber imports from Canada.