US lumber futures saw a notable uptick following the imposition of steep 25% tariffs on lumber imports from Canada and Mexico, a move that is expected to have significant implications for both the North American housing market and international timber trade.
On January 3, 2025, futures contracts for March deliveries trended higher, edging closer to the $600 per thousand board feet mark. Meanwhile, prices for May and June deliveries saw gains of approximately 3-4%, signaling that the market had largely anticipated the impact of the new tariffs.
The effect of these trade restrictions is already evident in Canadian lumber exports, which have shrunk to about a quarter of the US market share. With domestic lumber mills operating at full capacity, a constrained supply could push prices even higher, further exacerbating construction costs in an already expensive US housing sector.
As North American producers struggle to fill the void, European sawmills—particularly in Germany—are poised to step in and capitalize on the supply gap. However, concerns linger over potential retaliatory measures from the Trump administration, which has signaled a tough stance on EU imports. If similar tariffs are imposed on European lumber, the market could face another wave of price volatility.
For now, traders and industry stakeholders are closely monitoring the situation, anticipating whether US policymakers will take additional steps to control inflation in the construction sector or double down on protectionist trade policies.
