Homebuilders are bracing for the impact of higher tariffs on Canadian lumber, despite the fact that there’s a carveout for wood under the United States-Mexico-Canada Agreement (USMCA).
The Trump administration announced on July 31 that duties on Canadian imports that aren’t exempt from USMCA are going up 10 percentage points — from the 25 percent rate imposed March 4 to 35 percent on Aug. 7.
Appearing on CBS Face the Nation on Sunday, Canada-U.S. Trade Minister Dominic LeBlanc said he expects trade negotiations between the two countries will continue.
While Canadian lumber is exempt under USMCA, it’s been hit with separate antidumping and countervailing duties that recently increased.
The Commerce Department on July 25 issued a determination that softwood lumber from Canada is being dumped on U.S. markets, and raised an anti-dumping duty on Canadian lumber to 20.56 percent. That’s in addition to countervailing duties of 6.74 percent, which are also expected to go up to 14.38 percent this month.
So despite being exempt under USMCA, homebuilders are now paying duties of 27.3 percent on Canadian lumber — a rate that could soon be increased to 34.94 percent, pending a final determination from the Commerce Department on Aug. 8.
The National Association of Home Builders said in a statement that the trade group is “disappointed by this decision to raise lumber tariffs,” which it maintains “act as a tax on American builders, home buyers and consumers.”
Tariffs on Canadian lumber could go even higher than 35 percent, the group warned, as the Commerce Department is currently conducting a separate investigation to determine whether lumber imports represent a threat to national security.
“With housing affordability already near a historic low, NAHB continues to call on the Trump administration to carefully consider how placing additional tariffs on lumber and other building materials will raise housing prices and impact housing supply,” NAHB said. “We are also urging the administration to move immediately to enter into negotiations with Canada on a new softwood lumber agreement that will provide a fair and equitable solution to all parties and eliminate tariffs altogether.”
Adding to the uncertainty are at least five pending lawsuits challenging the Trump administration’s authority to impose sweeping tariffs on all of the U.S.’s trading partners, Utility Dive reports.
The supply of lumber available to homebuilders during the first quarter of 2025 was at the lowest level since 2019, according to data compiled by NAHB.
The U.S. imported 2.8 billion board feet from Canada during Q1 2025, down 6.5 percent from a year ago. U.S. production also dropped 2.1 percent to 9.1 billion board feet.
Lumber supply at 6-year low
Lumber availability and sources, Q1 2025. Source: National Association of Home Builders.
Although imports from countries other than Canada increased to 0.6 billion board feet, that represented less than 5 percent of the supply available to builders.
During the week ending July 25, framing lumber prices were up 16.8 percent year-over-year, while lumber futures were up 31.1 percent from a year ago — suggesting more price increases loom, NAHB reported.
NAHB research shows the average new single-family home requires 15,000 board feet of framing lumber, 6,800 square feet of oriented strand board (OSB — a moisture-resistant engineered wood panel similar to plywood) and 2,200 square feet of plywood.
A four-fold spike in lumber prices in 2021 added more than $30,000 to the price of an average new single-family home, NAHB said in a January policy brief. Costs of other building materials like concrete, gypsum, steel and power transformers have also seen double-digit price increases over the past four years, the group said.
To address high lumber prices, NAHB advocates:
- Negotiating a long-term deal with Canada to reduce tariffs and boost imports
- Increasing domestic production from publicly-owned lands
- Reducing U.S. lumber exports to China and other countries
- Increasing imports from countries other than Canada.
