U.S. Increases Softwood Lumber Duties, Threatening Housing Affordability & Sparking Canadian Response
Washington D.C. – The U.S. Department of Commerce announced today an increase in duties on softwood lumber imports from Canada, escalating a decades-long trade dispute and promptly raising concerns about the cost of homebuilding in the United States. The decision, impacting key housing markets, comes despite pleas from both Canadian and U.S. industry leaders for a negotiated settlement.
The Core of the Dispute: A Long-Standing Trade Conflict
The issue of softwood lumber has been a recurring point of contention between Canada and the United States for over 40 years, with cycles of tariffs, litigation, and attempted agreements. At the heart of the dispute lies the differing systems for pricing timber harvested from public lands.
Canadian provinces, especially British Columbia, Alberta, Ontario, and Quebec, utilize a “stumpage fee” system. This system charges lumber companies a fee for harvesting timber from Crown (public) land, intended to reflect the value of the resource. U.S. producers argue this system constitutes an unfair subsidy, as Canadian companies pay lower rates than their U.S. counterparts who typically bid on timber sales at market rates. The U.S.Department of Commerce agrees, asserting that Canadian lumber is sold in the U.S. at less than fair value.
impact on U.S. Housing & Economy
The newly increased duties are expected to further inflate the cost of new home construction in the U.S. A recent report by the Canadian Chamber of Commerce, highlighted by the Ontario Forest Industries Association, estimates that existing tariffs have already added approximately $6,000 USD to the price of a single-family home. This increase disproportionately impacts states heavily reliant on Canadian softwood imports.
States most Affected by Increased Tariffs:
While nearly all states utilize softwood lumber, the following are particularly dependent on Canadian imports and will likely feel the brunt of the increased duties:
northeast: States like Massachusetts, New York, Pennsylvania, and New Jersey rely heavily on Canadian lumber due to proximity and established supply chains.
mid-Atlantic: Maryland, Delaware, and Virginia also demonstrate notable reliance.
Southeast: North Carolina, South Carolina, and Georgia are experiencing rapid population growth and housing demand, making them vulnerable to increased lumber costs. Midwest: Illinois, Michigan, and ohio utilize Canadian lumber for a considerable portion of their construction needs.
* West: While also lumber producers themselves, states like California and Washington still import significant volumes from Canada to meet demand.
Canadian Response & Industry Fallout
The decision has drawn swift condemnation from Canadian officials and industry representatives.Kurt Niquidet, president of the trade council, stated the decision “will harm communities on both sides of the border,” and called for a “stable, negotiated agreement that supports jobs, trade, and housing affordability.”
The impact is already being felt in Canada, particularly in british Columbia. Over the past decade, escalating duties have contributed to mill closures and job losses. According to the United Steelworkers union, approximately 6,000 forestry jobs have been lost in B.C. since 2016 due to the trade dispute. Mills like the Canfor mill in Prince George, B.C., have been forced to reduce shifts or temporarily close due to market access limitations.
In response, Prime Minister Mark Carney announced over $1.2 billion in funding this week to support the Canadian softwood lumber industry. The funding aims to diversify export markets beyond the U.S. and provide retraining opportunities for workers affected by mill closures. Specifically, $600 million will be allocated to support innovation and market growth, while $600 million will be dedicated to worker transition programs. british Columbia Forests Minister Ravi Parmar emphasized the need for a resolution that benefits both countries.Looking Ahead
The current situation underscores the fragility of the North American lumber supply chain and the potential for trade disputes to impact housing affordability. Without a negotiated solution, the cycle of tariffs and retaliation is likely to continue, further destabilizing the industry and impacting consumers on both sides of the border. The next steps remain uncertain, but industry observers anticipate potential challenges to the U.S. duties through the World Trade Organization (WTO) and continued diplomatic efforts to reach a long-term agreement.
