Beyond tariffs from President Donald Trump on Tuesday, he also ordered the U.S. Commerce Department to investigate Canada’s lumber market — an industry integral to the U.S. housing market.

Industry advocates praise the move, saying Canada has subsidized their cheap exports that make up 30% of the U.S. market. They say Canada’s unfair trade practices have come at the cost of U.S. logging.

But homebuilders say it will come at the cost of home prices. Meanwhile, the BC Lumber Trade Council said in a statement to the The Canadian Press that the proposed tripling of duties is unjustified and would harm forestry workers and hike home prices in Canada and the U.S

Ryan De Young, president of De Young Properties, said they haven’t seen construction costs go up, but they’re bracing for it. He said there’s no way around rising home prices.

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“The main message that we are trying to get out to our prospective buyers is just really encouraging them to act promptly to secure our current pricing,” De Young said. “There’s no way around it, prices will need to be adjusted unless something changes. And if a customer is looking and had a life change and they need to purchase a new home, I would jump on it immediately.”

Possible Speculation Driving Lumber Prices Upward: NAHB

Lumber futures surged Tuesday following not only the tariff initiation but also the Commerce Department’s investigation, reported Transport Topics.

Softwood lumber prices — the kind used to build homes — reached the highest levels Tuesday since August 2022 when COVID-19 shutdowns shuttered ports.

Prices on Wednesday stabilized a little.

Lumber prices react faster to increases compared to decreases. The National Association of Homebuilders says wholesalers tend to be “trigger happy” when prices increase.

Buyers will clear out inventories to secure low prices, and wholesalers who think prices will continue to rise will buy faster than those who think the run will only last a couple weeks, NAHB explained.

Jeff Perritte, owner of White Pine Lumber in Fresno, said he began to see speculation in lumber pricing in February when Trump originally threatened tariffs.

Lumber only makes up a small percentage of the price to build a home, but industry experts also expect drywall — a major Mexican export — and sheet paneling costs to also increase.

“Tariffs are going to have a direct impact on the costs of building a home,” said Darren Rose, president of the Building Industry Association of Fresno Madera Counties. “We import lumber, steel, aluminum, copper, that are all essential elements to building a home, an office building, a commercial building, industrial facilities. It’s going to have an inflationary impact.”

Canada’s Mills Dump Product at Cost of US Industry: Lumber Coalition

The U.S. Lumber Coalition praised Trump’s actions on Monday, saying Canada has been dumping product in U.S. markets far below the cost to produce.

Canadian lumber mills cannot operate at the level they do without exporting to the U.S., said Zoltan van Heyningen, executive director with the coalition. Sometimes as much as 75% of production needs to come to the U.S.

A preliminary determination from the Commerce Department on Monday found Canadian suppliers will dump their product below cost then be subsidized by the Canadian government, he said. That’s led to many U.S. mills closing because they can’t compete.

The U.S. is the largest importer of wood, bringing in $40 billion from Canada, China, and Brazil in 2021, according to the U.S. International Trade Commission.

“For them, the U.S. market is a must-have,” van Heyningen said. “What that really means for us is that they must maintain a certain market share in order to keep their mills running. And that’s where the friction comes, because what happens is they will do whatever it takes to maintain that market share.”

Duties on Canadian lumber have made American timber more competitive, leading to the expansion of more mills domestically.

Production has increased by 6.7 billion board feet since 2016, when those duties largely began, van Heyningen said.

However, recent market downturns have caused many mills to close. The Epoch Times reports 50 mills nationwide either closed or reduced capacity in 2024 and 2023. One mill operator reported to The Epoch Times that a “lack of a willing and drug-free workforce” contributed to the closing of that operation.

Van Heyningen said a return to illegal trade activity also contributed to the losses.

Trump Calls US Logging ‘National Security’ Issue

A return of U.S. logging could be complicated, but the U.S. Lumber Coalition says the U.S. has the capacity to meet its own need.

Interest rates have affected the home building market, De Young said, keeping it at average or just slightly below average. Even reductions in home prices can’t compete with the net cost of a home brought on by the cost of money.

Trump on Monday signed an executive order calling on federal agencies to identify portions of the Endangered Species Act that can be eliminated to encourage logging. Trump called the lumber interests one of national security.

Environmental groups say vague language in the order jeopardizes protections put in place by Congress.

“The order’s direction to force emergency consultations to rubber-stamp logging projects under a fabricated ‘national security emergency’ is a lawless interpretation of the ESA,” the group Oregon Wilds stated.

But van Heyningen said trade cases have allowed U.S. producers to be competitive again.

“You’re going to continue to see that trend over the next number of years as we enforce our trade laws,” van Heyningen said. “And I think you’re going to see the same success rate that we’ve had up to this point.”