Germany, Sweden, Brazil, and even Chile could be the big winners from Trump’s tariffs on Canadian lumber, at least in the short term, as builders feel the full weight of tariffs on rising prices.
It comes after US lumber prices reached a 30-month high yesterday, their highest level since the peak of the pandemic, rising to $682 per thousand board feet. On-the-spot prices for spruce-pine-fir boards—used to build homes—and southern-yellow-pine, a substitute for spruce-pine-fir in outdoor applications, have also risen to their highest levels in more than a year.
“Every day, there’s a new interpretation of what Trump will do next. The whole lumber industry doesn’t know what to do. We want to know what the rules of the game are. It’s total chaos.”
Russ Taylor – from Russ Taylor Global – who spoke to the Wall Street Journal yesterday.
Already, Wood Central has reported that tariffs—which have also hit the steel industry—could add between $35k and $45k to the cost of a new home under worst-case scenario modelling. However, analysts, traders, and even sawmills are unsure how much the tariffs will add to the price of two-by-fours and wood panels.
Whilst a hot market could see the full tariff passed onto consumers, a slow market might mean half the tariff shows up in prices, Taylor said: “You’ll just pump up prices until Canadians come back into the market. That will hurt the consumer.”
According to Lesprom, Canada last year accounted for the vast majority of US lumber imports (84%), dwarfing Germany, Sweden, Brazil, and Chile, which held a 5.9%, 2.7%, 1.5%, and 1.2% share. At the same time, Canada—which could be hit with a 52% tariff and duty on all US-bound lumber—could turn its attention from North America and instead focus on China, Japan, and South Korea.
“In China, where Russia supplies nearly 68% of softwood lumber imports, Canada holds only a 7.5% share. If Canadian exporters divert shipments from the US to China, they could challenge Russian dominance in the market.”
Russian-based Lesprom reporting on the opportunity for Canada to challenge Russia for dominance in China’s lumber market.
As for whether the US can “go it alone” and meet demand just with local timber: “The bottom line (is that) the US need Canadian lumber and OSB; (and) Canada needs the US lumber and OSB market,” Mr Taylor said in January. “Canadian exports of MDF and particleboard go mainly to the US (98% of total exports) while plywood exports to the US are small at 300 million sf and represent about 3% of US consumption.”
- To learn more about the North American softwood lumber dispute and its impact on the price of Spruce-Pine-Fir (SPF) and Southern Yellow Pine (SYP), click here for Wood Central’s special feature. And to find out more about the Trump administration’s plans to use US lumber to fix the housing crisis, click here for more information.
