Higher Tariffs on Canadian Lumber May Fail to Boost US Forestry Investments
The ongoing dispute over Canadian lumber imports and U.S. tariffs reflects broader economic concerns in the construction industry. Recently, new tariffs on Canadian lumber were announced, signaling a significant effort to bolster U.S. forestry investments amid complicated trade dynamics.
Recent Tariff Developments on Canadian Lumber
On September 29, 2025, President Donald Trump unveiled new tariffs targeting imported timber and wood products, specifically an added 10% on Canadian lumber. This follows an earlier implementation of a 35% tariff in August. Under the new regulations, starting October 15, Canadian softwood lumber imports could face tariffs exceeding 45%.
- Current Tariffs:
- Initial Tariff: 35% implemented in August 2025
- New Tariff: Additional 10% announced in September 2025
- Projected Tariff: Over 45% as of October 15, 2025
- Presidential Mandate: Directives issued to expand domestic timber harvesting.
Impacts on U.S. Timber Industry
Despite possessing substantial forest resources, the U.S. faces challenges in replacing imports with domestic lumber. The U.S. imports approximately 40% of its softwood lumber needs, with over 80% sourced from Canada. Efficiency and cost discrepancies complicate the transition to domestic sources.
Key Factors Affecting U.S. Lumber Investment
- Labor Challenges: The scarcity of skilled labor hampers timber harvesting growth.
- Species Variability: Differences in tree species affect construction material availability and suitability.
- Production Costs: Domestic lumber prices are often higher despite tariffs on imports.
The U.S. government has acknowledged the importance of maintaining sufficient domestic lumber production to safeguard national security. A Commerce Department assessment indicated that an overdependence on foreign lumber might jeopardize national needs for wood products.
Historical Context and Market Fluctuations
Historically, the volume of Canadian lumber imports has seen substantial fluctuations. In 1991, imports stood at 11.5 billion board feet, peaking at 22 billion board feet in 2005. However, during the Great Recession, these imports plummeted to less than 8.4 billion board feet in 2009.
| Year | Imported Lumber (Billion Board Feet) |
|---|---|
| 1991 | 11.5 |
| 2005 | 22 |
| 2009 | 8.4 |
| 2024 | 12 |
In terms of pricing, the average cost of Canadian lumber rose notably during the COVID-19 pandemic, reaching highs of nearly $800 per thousand board feet. By 2024, prices had reduced to approximately $436 per thousand board feet.
Housing Market Dynamics and Future Considerations
The relationship between lumber availability and housing construction remains significant. As new home construction rises, demand for softwood lumber increases. Conversely, declines in housing starts can sharply reduce lumber demand, illustrating the cyclical nature of the market.
As the Biden administration examines ways to enhance domestic lumber production, stakeholders will be attentive to the balance between cost, type, and source of lumber, ultimately impacting construction projects across the U.S.
