US lumber prices, which have already experienced an increase in recent months due to reduced production in Canada, may see additional rises following President-elect Donald Trump’s proposed tariffs on imports from Canada and Mexico.
On Tuesday, lumber futures in Chicago surged by as much as 2.1%, reaching $599 per 1,000 board feet, after the president-elect announced via social media his intention to impose a 25% tariff on all goods from these countries unless they take measures to reduce the influx of fentanyl and migrants into the United States. Consequently, shares of forestry companies such as West Fraser Timber Co. and Interfor Corp. declined. Canada, the largest foreign supplier of lumber to the US, has already been grappling with numerous sawmill closures due to increased US tariffs. The introduction of additional tariffs could further jeopardize US lumber supplies, particularly as the country aims to rebuild areas affected by hurricanes.
Kurt Niquidet, chief economist of the BC Council of Forest Industries, remarked, “What we’ve observed is that such duties or tariffs invariably lead to a decrease in supply and an increase in prices, which adversely affects housing affordability.” He noted that while the implementation of tariffs is less predictable than duties, which are reviewed annually, both would impose significant financial challenges on Canadian producers.
Jim Tobin, president of the National Association of Home Builders, stated in an emailed response that tariffs “will further exacerbate our nation’s ongoing housing affordability crisis.” He indicated that the association had already anticipated price increases over the coming year due to rising housing demand
The United States has made significant strides toward self-sufficiency in lumber production; however, it continues to depend on Canadian imports to satisfy domestic demand. The forests in the Southern United States, which represent the largest lumber production area on the continent, experienced substantial damage during the recent hurricane season.
Hurricane Helene, which struck in September, caused damage to approximately 6% of Georgia’s forests, translating to around 1.47 million acres and resulting in losses estimated at $1.28 billion, as reported by the Georgia Forestry Commission. Following the impacts of hurricanes Helene and Milton, there was a decline in housing construction in the South during October, as builders chose to delay projects. Nevertheless, the issuance of single-family permits, an indicator of future construction activity, increased to its highest level since April.
Reconstruction efforts in the areas affected by the hurricanes are gradually gaining traction and are expected to bolster lumber sales in late December and into the following year, according to Crystal Gauvin, a senior economist at Forest Economic Advisors..
