President Donald Trump has repeatedly claimed that the US doesn’t need products from Canada, including oil, autos, and lumber. However, experts warn that imposing tariffs on Canadian lumber imports could exacerbate the ongoing housing affordability crisis in the US.
Softwood lumber is a critical component in the US homebuilding industry, used in the framing, roof, and siding of homes. The US imports about 30% of its softwood lumber from Canada, and the industry relies heavily on predictability. However, the Trump administration’s recent decision to impose a 25% tariff on practically all imported goods from Canada, including lumber, could lead to higher costs for homebuyers.
The US-Canada Softwood Lumber Agreement, which was active from 2006 to 2015, resulted in softwood exports declining by nearly 8%, with US consumers losing $2.3 billion. Experts warn that similar tariffs could have a similar impact on the housing market.
Despite having an estimated 300 billion trees in the US, expanding the domestic wood industry to fill the gap would be a challenging and time-consuming process. Not all wood is suitable for homebuilding needs, and regulatory approvals, labor shortages, and infrastructure development are significant barriers to increasing domestic production.
In the past, when lumber prices skyrocketed, sawmill employment did not increase significantly, as there are large fixed costs in the industry. Some homebuilders are optimistic about the potential for regulatory relief, but others warn that tariffs could lead to higher costs for homebuyers and further exacerbate the housing affordability crisis.
The National Association of Home Builders estimates that imported construction materials, including lumber, account for about 7% of the cost of new single-family and multifamily construction, and that tariffs could raise costs by $3 billion to $4 billion. The organization notes that the impact would be felt most by low- and moderate-income households, who are already struggling to afford housing.