The powerful National Association of Home Builders (NAHB) is warning that soaring U.S. import taxes on Canadian softwood lumber — now exceeding 35 per cent — are driving up construction costs and adding strain to an industry already battling high material and labour expenses.
NAHB chair Buddy Hughes said builders are being squeezed as duties push up the cost of essential inputs. Sluggish home‑sales activity has compounded the pressure, forcing many builders to offer incentives to hesitant buyers. “Market conditions remain challenging with two‑thirds of builders reporting they are offering incentives to move buyers off the fence,” he said.
While the NAHB/Wells Fargo Housing Market Index has edged upward, the association says confidence remains weak. Builders continue to report reduced sales expectations and widespread discounting, with 40 per cent of respondents lowering prices by an average of 5 per cent in December.
The NAHB’s warnings put it at odds with the U.S. Lumber Coalition, which argues that the impact of import taxes on consumers has been overstated. The coalition maintains that softwood lumber represents only a small share of the total cost of a new home, particularly when land values are included.
The Canada–U.S. softwood dispute — one of the longest‑running trade battles between the two countries — has intensified in recent months. Washington argues that Canada’s system of Crown‑owned forests and provincially set stumpage fees gives Canadian producers an unfair advantage over American competitors, who typically harvest from private land and bid for timber rights. Ottawa rejects the claim, insisting Canadian producers are not subsidised and do not dump lumber below market value.
The latest escalation includes a combined 35.16 per cent in anti‑dumping and countervailing duties imposed by the U.S. Department of Commerce, up sharply from the previous 14.4 per cent. In September, President Donald Trump added a further 10 per cent tariff under Section 232 of the U.S. Trade Expansion Act, citing national‑security concerns. The new levies took effect on Oct. 14.
Additional tariffs of 25 per cent on imported furniture, kitchen cabinets and vanities also came into force on the same day, with rates set to rise again on Jan. 1, 2026 — a development expected to further pressure Canada’s forest‑products sector. Canadian producers have paid more than $10 billion in duties on lumber shipped from Canadian sawmills since 2017. Production from U.S. mills, including those owned by Canadian companies, remains exempt.
In response, Ottawa has launched the Canadian Forest Sector Transformation Task Force, led by Ken Kalesnikoff of Kalesnikoff Mass Timber and Frédéric Verreault of Chantiers Chibougamau. Federal Energy and Natural Resources Minister Tim Hodgson said the task force will spend the next 90 days examining competitiveness challenges and opportunities, with a focus on boosting domestic use of Canadian wood products, including mass timber and modular construction systems.
Hodgson pointed to the federal government’s $2.35‑billion support package for the forestry sector, announced since August, which includes $1.2‑billion in loan guarantees and $500‑million in grants to help producers diversify into new export markets. Several industry groups, however, say the rollout has been too slow to address immediate financial pressures.
Softwood markets remain volatile. Benchmark lumber prices have fallen roughly 75 per cent from the pandemic‑era highs of 2021, when a surge in home‑renovation activity drove unprecedented demand. U.S. sawmills currently supply about 70 per cent of domestic consumption, with Canada providing 24 per cent and other countries the remaining 6 per cent.
Hodgson said the sector continues to face “repeated, unjust trade action” from the United States, adding that shifting U.S. trade policies are creating “uncertainty, volatility and real pressure for Canadian workers and businesses.”
To learn why Trump’s tariffs are adding $10,000 to the cost of a home across the United States, click here for Wood Central’s special feature.
