WASHINGTON, D.C. — The lumber trade is facing significant challenges this year. U.S. housing starts are unusually low, leading to decreased demand and prices for lumber. At the same time, trade costs are rising, particularly for Canadian producers. In July, the U.S. Commerce Department raised the duty rate on softwood lumber imports to a record 35.16 percent. Recently, President Donald Trump imposed an additional 10 percent tariff on Canadian lumber imports, citing national security concerns under Section 232 of the Trade Expansion Act. This move aims to strengthen the domestic lumber industry, a decision welcomed by U.S. producers.

Andrew Miller, chairman of Stimson Lumber in Oregon and chair of the U.S. Lumber Coalition, stated, "This is our market. America first, baby. The demand is in this market, not in Canada." He emphasized that U.S. producers should not be obligated to accept subsidized Canadian products that undermine American sawmills and their workers.

American sawmills and their supporters have praised the increased duty rate and new tariffs, viewing them as a way to reduce the influx of Canadian lumber and capture a larger share of the U.S. market. However, free market advocates argue that tariffs ultimately harm consumers, as the added costs will likely lead to higher prices. They also express skepticism about the U.S. lumber sector's ability to quickly replace Canadian lumber.

The rationale for the tariffs stems from a U.S. investigation that claims high volumes of wood imports threaten the viability of the U.S. wood industry, posing risks to critical infrastructure and defense readiness. Colin Grabow, associate director at the Cato Institute, criticized this justification, saying, "Just from the surface level, this strikes me more as run-of-the-mill protectionism, rather than something narrowly tailored to advance U.S. national security interests."

Kurt Niquidet, president of the British Columbia Lumber Trade Council, echoed this sentiment, stating, "Suggesting that we’re a national security threat to the United States just doesn’t hold any water."

Despite the higher duties, Canadian lumber exports to the U.S. have not significantly decreased. Statistics Canada reported a 25.4 percent drop in lumber exports in August, but U.S. trade data is pending due to a government shutdown. Miller noted that Canadian exports have not slowed enough, even as they incur losses.

The impact of the tariffs and duties is expected to unfold over time. British Columbia has seen a 10 percent increase in sawmill closures this year, with John Brink, CEO of Brink Forest Products, reporting a drastic reduction in workforce from 400 to an anticipated 60 by year’s end. He described the current trade levels as unsustainable, stating, "Today, we’re down to about 20 percent of where we were (a year ago)."

Experts agree that the U.S. lumber industry needs higher prices to thrive. Miller indicated that American sawmills are not operating at full capacity due to market saturation. He believes that the success of the tariffs will depend on whether they create a high enough economic barrier to reduce Canadian shipments. He stated, "We’re gonna need prices to come up probably 10 or 15 percent before my company and peers I work with would probably say we’re going to go back to our full 100 percent production."

Jason Miller, a supply chain management professor at Michigan State University, raised concerns about the broader implications of the tariffs. He noted that while they may protect the domestic lumber industry, which employs around 90,000 people, they could negatively impact downstream industries, such as housing construction, which employs significantly more.

The National Association of Home Builders has warned that tariffs could increase the cost of building a single-family home by approximately $10,900. However, Andrew Miller dismissed these concerns, arguing that the framing costs are minimal and that manufacturers and distributors will likely absorb the costs, as seen in other sectors.

Canadian lumber's market share in the U.S. has decreased from 30 percent to around 25 percent, yet the U.S. still imported 12 billion board feet last year to meet demand. Niquidet emphasized the necessity of Canadian lumber, stating, "They need to import lumber from Canada."

Miller remains hopeful that Trump's policies will allow the U.S. industry to find its optimal output level. He speculated that with U.S. mills operating at regular capacity, the country could become self-sufficient in five to six years. However, van Heyningen expressed skepticism about the claims of a Canadian lumber shortage, suggesting that U.S. producers have simply managed to capture a smaller market share.

If the current combined duty and tariff rate of 45 percent does not alter Canadian exporters' behavior, Miller indicated that the industry would advocate for an increase to 55 percent. The future of the lumber trade remains uncertain as the effects of these tariffs and duties continue to unfold.