United States Increases Duties on Lumber
In a development that could shake the North American housing and construction industries, U.S. officials are once again weighing the possibility of increasing duties on Canadian softwood lumber. This comes amid a volatile market that has already seen prices spike and investor confidence wobble in the first half of 2025.
A Market on Edge
Softwood lumber prices surged 23% in April compared to the same month last year, driven by a combination of tightening supply and mounting fears over trade tensions. Futures markets echoed that anxiety in the first quarter, climbing sharply as traders priced in the risk of higher duties and the ongoing wave of sawmill closures throughout North America.
The implications have been immediate and far-reaching. Major U.S. homebuilders such as Lennar, D.R. Horton, and Toll Brothers experienced notable stock declines during the spring. These companies rely heavily on consistent and affordable lumber supplies to keep construction timelines and costs in check. Disruptions in pricing or availability can quickly erode profit margins and delay projects.
Canada’s Outsized Role
Canada remains the dominant supplier of softwood lumber to the United States, accounting for about 85% of U.S. lumber imports and supplying nearly one-quarter of the total U.S. softwood lumber market. This reliance has long been a point of friction in trade relations, with American producers accusing Canadian firms of benefiting from unfair government subsidies.
Although Canadian lumber was left out of the most recent round of tariffs announced by the Trump administration, it has not escaped scrutiny. The administration has signaled it is keeping a close watch on lumber trade as part of its broader “America First” economic strategy. That includes reevaluating long-standing trade agreements and considering protectionist measures to support domestic sawmill operators and timber producers.
Political and Economic Pressure
The pressure to act is building from multiple fronts. U.S. lumber producers are lobbying for renewed duties, arguing that Canadian imports continue to undercut domestic prices and jeopardize American jobs. At the same time, high lumber costs are creating headaches for builders and homebuyers alike, contributing to affordability issues in an already strained housing market.
With the 2026 election season looming, the Trump administration may see political advantage in defending domestic industries, even at the risk of inflaming cross-border trade tensions. Raising duties on Canadian lumber could be framed as a measure to protect U.S. jobs and strengthen supply chains, even if it results in higher costs for consumers and builders.
Looking Ahead
For now, Canadian lumber remains tariff-free under current policy, but the situation is far from settled. Industry analysts warn that any move to reinstate or increase duties could drive prices even higher, further destabilizing the market and raising costs across the construction sector.
As Washington deliberates, stakeholders on both sides of the border are bracing for impact. The next few months could determine whether softwood lumber becomes another flashpoint in U.S.-Canada trade relations—or whether cooler heads will prevail in search of a more stable and predictable supply chain.
