The Blubber

U.S. Threatens 52% Tariffs on Canadian Lumber, Raising Industry Fears

The United States is escalating tariffs on Canadian lumber, with total import taxes reaching 52%, sparking concerns about the future of Canada’s forestry sector and higher costs for U.S. homebuilding.

On Monday, the U.S. Department of Commerce proposed nearly tripling anti-dumping duties on Canadian softwood lumber to 20.07%, according to a document published in the U.S. International Trade Administration database. This is in addition to the existing 6.74% countervailing duty, which aims to offset what the U.S. claims is the undercutting of American producers by Canada’s lower-cost lumber.

Trump Confirms Broader Tariffs on Canada and Mexico

Also on Monday, President Donald Trump confirmed that his administration will enforce 25% tariffs on all Canadian and Mexican goods, excluding Canadian energy products.

When combined with the Commerce Department’s lumber duties, the total levy on Canadian softwood would reach 51.81%. The final confirmation of the new anti-dumping duty is expected in August, according to Kurt Niquidet, president of the British Columbia Lumber Trade Council, who noted that final determinations rarely differ from preliminary ones.

Market Reaction and Industry Concerns

Following the announcement:

• Lumber futures surged to their highest level in over two and a half years.
• Shares in major Canadian lumber producers—Interfor Corp., West Fraser Timber Co., and Canfor Corp.—fell sharply on fears of reduced exports to the U.S.

The dispute over softwood lumber has been a longstanding trade conflict between the two nations. The U.S. argues that Canada subsidizes its loggers by charging below-market fees for harvesting trees, leading to repeated imposition of duties on Canadian softwood over the years.

Trump Orders National Security Investigation into Wood Imports

On Saturday, Trump ordered an investigation into whether Canadian wood imports threaten U.S. national security, a move that could justify further import restrictions. He also signed an executive action aimed at boosting domestic timber production.

Canada currently supplies up to 30% of the U.S.’s softwood lumber needs and is the primary foreign supplier of imported lumber.

Potential Consequences for Canadian and U.S. Markets

Analysts at Bank of Nova Scotia warned that if all proposed tariffs take effect, Canada’s paper and forestry sector could face severe disruptions, with some smaller mills potentially unable to survive.

“If all of these taxes move forward, it’s hard to see how parts of the Canadian paper and forestry products sector aren’t ravaged,” the analysts wrote in a note to clients.

Meanwhile, British Columbia Premier David Eby condemned the tariffs, saying they would hurt both Canadian workers and American homebuyers.

“American homes will be more expensive to build, and hardworking people in our province will bear the brunt of these unwarranted duties,” Eby said in an emailed statement.