Increased tariffs on housing materials could help the U.S. timber industry — but also result in higher home prices

The back-and-forth tariff fight between the U.S. and Canada has also heated up the ongoing debate over what impact the increased costs will have on housing materials.

On Tuesday, Canada put in place new tariffs on about $20 billion worth of U.S. imports, which included wood products. The move follows the Trump administration’s Aug. 22 announcement of 50% tariffs on various Canadian wood products and laminated veneer lumber, following the collapse of trade talks between the two countries.

While Canadian Prime Minister Mark Carney has described his country as being in a trade war with the U.S., these various tariffs only impact about 6% to 7% of total trade between the two countries.

But the trade standoff is poised to escalate further, with President Donald Trump threatening to impose additional tariffs on auto imports and to block the sale of aircraft from Quebec-based Bombardier in the United States. Canada has vowed to retaliate dollar for dollar.

The Trump administration has included 36 different types of plywood with this group of tariffs. BC Wood, a Canadian trade organization, maintains that the tariffs are on pine and coniferous wood, which is used for a variety of housing products, including moldings, doors and floors. Other products subject to tariffs include particle board and medium-density fiberboard, according to a report in The Architect’s Newspaper.

Canada has placed tariffs on hardwood lumber, plywood and various processed wood articles that are imported from the U.S.

Besides driving a rift between longtime allies, the tariffs have highlighted a longstanding divide between the U.S. lumber industry and those who build homes and buy wood products for house interiors.

Divided outlook
The National Association of Home Builders (NAHB), which has advocated for exempting building materials from tariffs on Canadian products, argues that such federal moves will increase the cost of building homes at a time when prices are already at record highs. A 2025 survey conducted by the NAHB and Wells Fargo found that builders expected last year’s tariff actions by the Trump administration to increase the cost of an average home by $10,900.

The Center for American Progress reported last December that the price increase was even higher. Its analysis estimated that tariffs on materials such as lumber, copper, cabinets and steel will cost the building industry $27 billion, in turn raising the cost of each new home by $17,500. Tariffs will also result in 450,000 fewer homes being built over the next five years, the group maintains, worsening the nation’s current housing supply shortage.

But the U.S. Lumber Coalition disputes the claims, arguing that lumber typically accounts for only 1% to 2% of the cost of a home, so it is not a major factor in the skyrocketing price of a new home.

The Decorative Hardwood Association is part of a trade group, including the Kitchen Cabinet Manufacturers Association and the Coalition for Fair Trade in Hardwood Plywood, that have joined the U.S. Lumber Coalition to advocate in favor of tariffs as a way of protecting domestic producers.

Disputed growth
Coalition officials say enforcing U.S. trade laws against Canada’s “unfair trade practices” have helped reduce Canada’s softwood lumber market share in the U.S. from 32% in 2016 to about 18.6% over the most recent quarter of available data.

At the same time, the domestic industry is growing, adding more than 8.7 million board feet of U.S. lumber capacity and the production of more than 30 billion board feet of lumber cumulatively since 2016.

Whether or not the tariffs are helping the U.S. timber industry grow is still in dispute. Last year, the Trump administration announced plans to expand U.S. timber production by 25%. There have been some positive moves in that direction, with several new or expanded sawmills and wood manufacturing facilities either planned or being built.

One of the largest new projects is the planned construction of a 200,000-square-foot facility in northern California. Still, the industry has struggled to compete, and many mills have closed during the same time period.

The NAHB disagrees that the tariffs have made any difference in domestic production. The group cites a Federal Reserve report released late last year that showed U.S. sawmill production has remained essentially flat since 2023. The association maintains that the domestic timber industry cannot currently meet all the needs of home builders, and it would take years for U.S. production to ramp up to fulfill industry demand.

In the meantime, NAHB cautions, imports of Canadian softwood lumber are vital for an industry that is still dealing with a major shortage of homes.
  

Source: scotsmanguide.com