Originally published in Timber Online in mid-May ( https://www.timber-online.net/- by subscription ) – now with some recent updates
US market conditions have been lackluster since the Trump tariffs on Canadian lumber were postponed for the second time in early April. Since early March, W-SPF 2×4 random lengths (FOB BC mill) prices have decline almost 25% – from US$570/Mbf ($368/m3) to a low of US$437/Mbf (US$/282/m3) in early May before rising to US$450/Mbf at the end of May. Similarly, E-SPF 2×4 (delivered Great Lakes) has declined by 14% – from US$640/Mbf ($413/m3) to US$545/Mbf (US$/353/m3) in late May. For delivered prices to US Central East Coast, add about US$10/Mbf for random length and US$75/Mbf for 16-foot lengths to E-SPF Great Lakes prices.
Mill gate W-SPF 2×4 #2 & Better lumber prices were selling at a US$30/Mbf discount to southern yellow pine (SYP, FOB mill) 2×4 in mid-May but are at a $34/Mbf premium to SYP 2×4 in late May. This compares to a peak premium for W-SPF of $180 in early March and the 15-year average price of SPF is at a ~$40 mill gate discount to SYP. As well, SPF prices may have bottomed out (+3% since mid-May,) but SYP prices have fallen sharply (-11%) in the second half of May.
The proposed 25% tariffs were the catalyst for SPF prices rising in the first two months of 2025, as current prices are exactly where W-SPF prices started off at the start of 2025. In other words, the price rise in SPF lumber was strictly tied to the potential of 25% implementation Trump tariffs being applied on Canada lumber and not from market demand. Today, this puts BC Interior SPF mills back near break-even levels (on an EBITDA basis) at current lumber prices and 14.4% duties with other Canadian regions looking to be marginally profitable. With tariffs in suspension mode, the US market fundamentals have now been exposed – the market is weak and remain weak – and there is too much supply – again!
The impact of President Trump’s trade war with the world has caused US consumer confidence to fall, interest rates remain high (30-year rate is at 6.89%), and housing starts are now expected to decline in the short-term (with a small chance of achieving 2024 levels of 1.36 million units in 2025). Drivers of consumption have been reading negative since February 2025 from the impact of Trump tariffs threats, and this is now showing up in weak lumber prices.
No one knows if or when tariffs could be applied to timber and wood products as well as derivative products from the Section 232 investigation and what the tariff levels might be by country. If tariffs are applied, that will be a game-changer, as higher costs for imported lumber will ultimately cause US lumber prices to rise. Canadian lumber will be subject to elevated import duties in about August (rising from the current 14.4% to near 34.5%). This factor alone will require Canadian lumber prices to rise – by 15% to even 20%. Any tariffs imposed on Canada and/or other countries will only increase lumber prices further to attract enough imports into the US market.
The “made-in-the-US noise” that the US does not need Canadian lumber – or from other countries – is completely bogus. US lumber imports represent 15 billion bf (24 million m3) and 30% of US consumption (Canada represents 24% of US consumption) – any imported lumber subject to tariffs can only raise US domestic lumber prices higher. US sawmill operating rates could possibly be increased in the short term – by perhaps 2% and as much as 4%, increasing output by 0.7 to 1.4 billion bf (1.0 to 2.0 million m3). New capacity increases are always possible, but capital projects or new sawmills will take many years to plan, build and reach start up. One report suggests that 70 new US sawmills would be required to replace all imported lumber! This would require massive capital investments as well as huge increases in skilled and unskilled labour in logging and sawmilling that is currently lacking. In March 2025, there were already 449,000 unfilled manufacturing jobs in the US. Logging and sawmilling jobs are not considered desirable by young workers, so trying to fill these forestry and mill positions will only get more difficult. As a result, the 15 billion bf of imported lumber is still a key requirement for the US market, given the inability for US production to significantly ramp up production in the short term.
The US administration is promoting an increase of the timber harvest in National Forests, but again, you need all of the elements of a functioning supply chain to actually increase the log supply to US mills. This can only be viewed as a mid- to long-term strategy but will not likely impact the supply of logs to US mills in the short-term.
US lumber prices are poised to rise because of the 20% increase in Canadian duties coming into effect in August. The actual amount of any imported lumber price increase will ultimately be determined by demand and supply forces, but increased duties will require higher prices for imported Canadian lumber, given their high market share of US consumption and current weak sawmilling margins. Higher lumber prices and volatility are a concern to home builders as well as home buyers, as succinctly outlined in the recent CNBC report (https://www.cnbc.com/2025/05/21/lumber-duties-housing-market.html ).
Southern yellow pine lumber production surpasses Canada’s total output – as a result, SYP lumber dynamics can have a sizeable effect on North American lumber prices. Seven Canadian companies operate over one-third of the US South’s lumber capacity, so they will also benefit from higher lumber prices caused by duties (or tariffs) on Canadian lumber.
European lumber exporters could also be exposed to tariffs under the US Section 232 investigation. With rising log prices in most key European sawmilling regions, higher sawnwood prices will be required to sell to the US market even with out potential tariffs!
As a result, the silliness of the Trump administration’s irrational rhetoric as well as biased trade policies will only result in raising all lumber prices to the US home builder, the renovation contractor, and the consumer. How much of the tariffs (or Canadian duties) are passed on to the consumer is the only wild card, but it will likely be the majority.
Russ Taylor, President
RUSS TAYLOR GLOBAL
Email: russtaylor@russtaylorglobal.com