Higher Tariffs on Canadian Lumber May Not Boost US Forestry

Strategic Insights -

The US imports about 40% of the softwood lumber it uses each year, with Canada providing over 80% of those imports. President Trump has announced new tariffs on imported timber and wood products, including an additional 10% tariff on Canadian lumber, in an effort to boost domestic timber harvesting and curb the arrival of foreign lumber. However, as researchers studying the forestry sector and international trade, we recognize that the US has ample forest resources, but replacing imports with domestic lumber isn't as simple as it sounds.

Key Takeaways:

  • The US imports about 40% of the softwood lumber it uses each year, with Canada providing over 80% of those imports.
  • President Trump has announced new tariffs on imported timber and wood products, including an additional 10% tariff on Canadian lumber.
  • The US has ample forest resources, but replacing imports with domestic lumber isn't as simple as it sounds due to differences in tree species and quality.
  • US lumber often comes at a higher cost, even with tariffs on imports.
  • Challenges like limited labor and manufacturing capacity require long-term investments, which temporary tariffs and uncertain trade policies often fail to encourage.
  • The amount of lumber imported tends to mirror the boom-and-bust cycles of housing construction, a dynamic that tariffs alone are unlikely to change.
  • The Commerce Department has concluded that an overreliance on imported wood products means "the United States may be unable to meet demands for wood products that are crucial to the national defense and critical infrastructure."
  • The US has a lot of potential lumber available, especially in the South, but the types of wood available are not always the same as what's available from Canadian imports.
  • Buyers will be looking not only at where their lumber came from, but what it costs and what type of lumber is best for what they need to accomplish.

Statistics:

  • In 2024, the US imported over $11 billion in forest and wood products from Canada, with softwood lumber accounting for almost half of that.
  • Historically, prices for Canadian lumber have averaged about US$330 per thousand board feet ($140 per cubic meter).
  • During and after the COVID-19 pandemic, import prices soared to almost $800 per thousand board feet ($340 per cubic meter).
  • By 2024, prices had dropped significantly to $436 per thousand board feet ($185 per cubic meter).
  • Housing starts fell from 2.3 million in January 2006 to less than 500,000 in January 2009, a decrease of nearly 80%.
  • In that same period, imports of Canadian lumber fell by more than 60%.
  • Domestic softwood lumber production fell by more than 40%.

Sources:

  • The Conversation -- USA (2) -- By Andrew Muhammad, Professor of Agriculture and Resource Economics, University of Tennessee
  • The Conversation -- USA (2) -- By Adam Taylor, no relevant affiliations beyond their academic appointment.