This week, the U.S. Department of Commerce released its initial findings regarding trade restrictions on Canadian softwood lumber. The imposed tariffs will increase significantly, jumping from 7.66% to 20.07%, in addition to countervailing levies of 6.74%, bringing the total charges to nearly 30%.
Unlike the broad 25% tariffs on Canadian goods entering the U.S., which seem intended as leverage in trade negotiations, these lumber-specific duties are set to remain in place. They align with the administration’s broader strategy of boosting domestic wood production to meet internal market demands.
On March 1, 2025, two executive directives were issued concerning this policy:
- A mandate to explore ways of expanding domestic logging operations by loosening restrictions and increasing timber extraction from federally owned land.
- An order for the Department of Commerce to assess the national security implications of importing raw timber, processed lumber, and related goods such as paper, wooden furniture, and cabinetry.
The main push behind these actions appears to come from the U.S. Lumber Coalition, which primarily focuses on limiting softwood imports. However, the administration’s attention now seems to be broadening toward other wood-based industries, signaling potential restrictions on finished wood products as well.
In the short term, these measures have driven U.S. softwood futures past $650 per thousand board feet—one of the highest points in history outside of the COVID-19 period. Despite this, the increase is not sufficient to counterbalance the newly imposed tariffs. This suggests that either prices will continue rising to curb demand, or the U.S. expects alternative sources to offset Canadian supply—something unlikely in the near term.
Currently, European imports account for about 15% of the total foreign supply and may expand in response to these changes, though the administration appears to be considering additional tariffs for European sources as well. Russian exports to the U.S. are already subject to steep duties ranging between 40-50%, but this policy could shift in the near future. Meanwhile, suppliers from Brazil, Chile, and New Zealand may find opportunities as they remain unaffected by the new restrictions for now.
The next significant development in this ongoing trade dispute is expected on April 2, 2025, when the administration will provide further details on retaliatory tariffs. These new measures will likely impact lumber imports but are also expected to extend to finished wood products such as flooring, plywood, cabinets, and furniture.
In response, West Coast Canadian exporters are working to increase shipments to Japan and China, potentially taking market share from Russian suppliers. Meanwhile, East Coast producers are redirecting their focus toward Europe and the Middle East.
The biggest beneficiaries of these policies are U.S. softwood mills and domestic sawmill equipment manufacturers. Additionally, hardwood mills and American producers of furniture and cabinetry stand to gain as imported finished wood products face new restrictions.
