Weeks after President-elect Donald Trump threatened to slap a 25% tariff on all Canadian goods, experts reveal that duties on softwood lumber could double from 14.4% to 30% - almost four-times higher than earlier this year.
Earlier this month, Justin Trudeau - Canada’s current Prime Minister - met with Donald Trump - the United States president-elect - at Trump’s residence at Mar-a-Lago in Florida to discuss tariffs. (Photo Credit: Everett Collection Inc / Alamy Stock Photo)
Duties on more than $3 billion of US-bound Canadian lumber could soon double, from 14.4% to more than 30%, with analysts expecting the US Department of Commerce to slap a new round of duties on softwood in response to a sharp drop in the price of Canadian lumber—down 70% from its 2021 peak. And that is in addition to Donald Trump’s threat to slap a 25% tariff on all Canadian goods—which, in effect, could see the new administration drive up the price of scarcely available lumber used to build much-needed housing and infrastructure projects from its first day in office.
That is according to the Canadian-based Globe and Mail, which said the prediction, which could come into effect in November 2025, is “based on a historical pattern of higher duties whenever there are low prices in the lumber markets.” As it stands, the accumulated duties paid by Canadian producers in the softwood dispute is more than US $7 billion (since 2017), including interest on payments held in trust by the US government.
According to Kurt Niquidet, president of the BC Lumber Trade Council, the post-2017 escalation in the 40-year softwood dispute, sparked by US buyers substituting local Southern Yellow Pine (SYP) for Canadian Spruce-Pine-Fir (SPF), has seen Canada’s share of market fall from 33% in 2016 to just 24% this year.
“We’ve (also) got a new administration coming in the US, so there is going to be a new dynamic,” Mr. Niquidet said. “The cost of those tariffs would (also) get passed through into the consumer prices.”
Wood Central understands that experts are concerned that the tariffs, even at a much lower rate than those threatened by President Trump, will be added to duties already slapped onto Canadian timber. Already, the Canadian Forest Owners—a group representing private forestry landowners across Canada—has joined with the federal and provincial governments in sounding the alarm about tariffs.
Paul Jannke, a Forest Economic Advisors lumber economist based in Massachusetts, said the proposed tariffs are likely a negotiating tactic. “Still, if tariffs of 10 per cent are imposed, it would translate into reduced shipments (from Canada) and higher lumber prices,” Mr Jannke said.
According to Mr Jannke, Canadian timber companies control “about 22% of the total US sawmill capacity,” with forest giants, including West Fraser, Canfor and Interfor Corp, expanding into the fast-growing American South to capitalise on lower operational costs (relative to Canada). “Even though the US South has lower operating costs than British Columbia, the region has experienced a series of shutdowns and reduced output at sawmills amid weak conditions,” the Globe and Mail reported yesterday.
More than US $3 billion in softwood lumber trade occurs between the United States and Canada. (Photo Credit: Adobe Stock Images)
In the US Department of Commerce’s latest rate revision – back in September – the combined countervailing and anti-dumping duties totalled 14.4% for most softwood from Canada, down from 14.54% in August but up sharply compared with 8.05% in early 2024.
According to the Globe and Mail, US-based lumber producers and timberland owners who complained about Canadian softwood received 10% of the US$5 billion in softwood duties paid in the previous dispute from 2001 to 2006. At the same time, Canadian companies recouped 80% of the funds, while 9% went to “meritorious initiatives” in the US, with the remaining 1% allocated to promoting lumber in both countries.
This time around, Vancouver-based forestry analyst Russ Taylor said, it’s unclear how much Canada will recover in US duties already paid since 2017. “Canada will get some of the duties back – maybe 80 per cent, but maybe 60 or maybe 50 per cent,” Mr. Taylor cautioned. “Once the duties are on, getting them off is very hard.”
- To learn more about the North American softwood lumber dispute and its impact on the price of Spruce-Pine-Fir (SPF) and Southern Yellow Pine (SYP), click here for Wood Central’s special feature. And to learn more about the impact of Donald Trump’s tariff plan on the global prices of timber, click here for Wood Central’s special feature earlier this month.
Source: Expect Price Hikes — USA to Ramp Up Duties on Canadian Lumber? | Wood Central