US President Donald Trump has announced a 25% tariff on imported softwood lumber from Canada, which could further worsen the ongoing housing affordability crisis in the US. Softwood lumber is a critical ingredient in the US homebuilding industry and is used for framing, roofing, and siding.
Economists and homebuilders warn that the tariffs could lead to higher costs for builders, ultimately passed on to consumers in the form of increased home prices. The National Association of Home Builders estimates that lumber imports account for about 70% of the $8.5 billion imported goods used in construction, with Canada being the largest supplier.
The move is part of Trump’s broader effort to boost domestic industries and reduce trade deficits. However, it may not stop at 25%. Softwood lumber imports are already subject to countervailing and anti-dumping duties of 14.5%, and some experts fear that tariffs could lead to a shortage of softwood lumber.
“Predictability is crucial for our industry,” said Nick Erickson, senior director of housing policy for Housing First Minnesota. “Tariffs on lumber can impact the supply chain and ultimately be passed on to new homebuyers.”
The US already faces an affordable housing crisis, with demand outpacing supply in many areas. The recent hurricanes and wildfires have destroyed thousands of homes, further exacerbating the shortage. Economists warn that tariffs on softwood lumber could make the situation even worse.
“It takes time to expand an industry,” said Robert Dietz, chief economist at the National Association of Home Builders. “Regulatory approval is needed to open new sawmills, and there are limits on harvesting timber. It’s not impossible to increase domestic production, but it requires policy refinements and addressing labor shortages.”
Despite the challenges, some homebuilders remain optimistic about the potential for regulatory relief and easing barriers to housing production. The issue has become a bipartisan effort to address the housing affordability crisis.
Source: https://edition.cnn.com/2025/02/02/economy/canada-tariffs-wood-lumber-housing/index.html