What Customers Should Know About Lumber Market Volatility
Threatened tariffs. Announced tariffs. Rescinded tariffs. Pending trade negotiations. Countervailing duties. A falling bond market. Rising mortgage rates.
This swirl of economic uncertainty has created a challenging environment for the lumber and building materials (LBM) industry. Beyond the day-to-day market noise, broader concerns are emerging: a cooling economy, slowing growth, and rising inflation. And unfortunately, uncertainty itself has become a major risk factor.
Still, there was a notable win for the industry in March. Canadian lumber and panel products were ruled compliant with the U.S.-Mexico-Canada Agreement (USMCA) and therefore exempted from the 25% across-the-board tariffs imposed under the International Emergency Economic Powers Act. This exemption protected a critical portion of North American supply from immediate cost shocks.
What’s Coming Next?
US AR6 Anti-Dumping and Countervailing Duties on Canadian Lumber: The sixth administrative review is set to conclude this summer. The final report is expected to increase the combined duty rate from 14.4% to over 30%. These aren’t traditional tariffs—instead, they’re deposit-based duties that Canadian producers must pay upfront, directly affecting their cost structures and potentially tightening supply. The U.S. Department of Commerce is conducting this review for the period of January 1 to December 31, 2023. Preliminary results for the AR6 antidumping (AD) review were released on March 3, 2025, and for the countervailing duty (CVD) review on April 4, 2025. These rates are not yet final; the determinations are expected by August 2025.
Section 232 National Security Investigation: In a broader move, the U.S. Department of Commerce has launched an investigation under Section 232, classifying lumber and other forest products as “strategic goods”—similar to steel, aluminum, and automobiles. Although the department has up to 270 days to issue a ruling, US Lumber Coalition anticipates implementation of a 10% – 25% tariff in the near term. These tariffs would extend beyond Canadian imports, potentially impacting European and Latin American suppliers as well.
Understanding the Cycle: Supply, Not Demand, Drives Prices
As the industry prepares for possible new trade barriers, it’s helpful to reflect on key market cycles from recent history:
- The 2006 housing boom and the 2009 Great Recession were demand-driven cycles.
- The 2021 COVID-19 lumber surge was supply-driven.
Across commodity markets, traders understand a central truth: changes in supply—more than demand—drive sharp price movements. Even small disruptions in supply can cause significant pricing volatility.
With roughly 28% of U.S. lumber supply coming from imports, primarily from Canada, any new tariffs have the potential to trigger another supply-side price spike.
What This Means for Customers
We want to make sure our customers are ready for continued market ups and downs, and staying informed as trade policies evolve. A lot of decisions are still in the works, but they could have a big impact on product availability, pricing, and planning.
As we look ahead, it’s going to be important to keep a close eye on market trends and stay in regular contact with your suppliers.
We also recommend not trying to “time the market” or hold off on purchases in hopes of catching a better deal. With so much uncertainty, that approach could backfire—leading to higher costs or supply shortages.
Right now, we’re seeing some major Canadian mills temporarily shutting down for 2–3 weeks, and many are keeping their log decks low. They simply don’t want to produce at a loss.
