🔥 BREAKING: CANADA PUSHES BACK ON NEW U.S. LUMBER TARIFFS — HOUSING MARKETS FEEL THE PRESSURE 🪵🇨🇦🇺🇸

Canada’s long-running softwood lumber dispute with the United States has entered a new and consequential phase, one that is reverberating through construction sites, government budgets and housing markets across North America.

Last month, the Trump administration imposed an additional 10 percent tariff on Canadian softwood lumber, adding to existing duties that already averaged roughly 35 percent and, for some producers, climbed significantly higher. The move, framed by Washington as a measure to support American mills, immediately raised the cost of one of the most widely used building materials in the United States.

The impact is being felt far beyond the lumberyards.

For decades, Canadian timber has supplied a substantial share of American demand. The United States consumes roughly 70 billion board feet of lumber each year across residential, commercial and industrial construction. Domestic mills produce about 58 billion board feet, leaving a gap of approximately 12 billion that has historically been filled largely by Canadian imports.

The new tariffs have made those imports markedly more expensive. Industry analysts say the added duties are significant enough to alter purchasing decisions and long-established supply routes. The price of framing lumber, which surged during earlier pandemic-era disruptions, has again climbed to levels that builders say strain already tight project budgets.

Housing affordability, already a central political and economic concern, is particularly sensitive to such increases. The United States faces an estimated housing shortfall of roughly 4.5 million homes, according to data from Zillow and echoed by the National Association of Home Builders. Annual housing starts have hovered around 1.3 million units in recent years — well below the pace needed to close that gap while keeping up with population growth.

Lumber typically accounts for 15 to 25 percent of the cost of constructing and finishing a single-family home. The National Association of Home Builders has estimated that recent tariff increases could add about $6,000 to the price of a typical new house, though some analysts caution that the figure may rise if elevated prices persist. For first-time buyers operating near the edge of mortgage qualification thresholds, even modest cost increases can prove decisive.

Treasury Secretary Scott Bessent has acknowledged the severity of the housing imbalance, raising the possibility of declaring a national housing emergency. But economists note that building millions of additional homes at affordable price points requires not only lower interest rates but also stable, reasonably priced inputs. When a key material remains structurally more expensive, the challenge intensifies.

In Ottawa, officials have responded not with retaliation in kind but with a broader industrial strategy aimed at reducing reliance on the American market.

Prime Minister Mark Carney’s government has unveiled a five-year, 5 billion Canadian dollar plan to support the forestry sector and diversify export destinations. A central component is a mandatory “Buy Canada” procurement policy requiring federal agencies and Crown corporations to prioritize domestically produced lumber in government-funded construction projects.

Because federal infrastructure, housing and defense projects represent billions of dollars in annual spending, the policy effectively guarantees a sizable domestic market for Canadian mills. The Business Development Bank of Canada has also expanded access to loans for small and medium-size producers affected by U.S. tariffs, while provincial governments in British Columbia, Ontario and the Prairie provinces have introduced complementary support programs.

The transition has not been painless. Industry groups report that more than 20 mills have closed permanently in recent months, and thousands of workers have lost their jobs. Several larger companies, including West Fraser and Canfor, have consolidated operations, shuttering higher-cost facilities and concentrating production in more efficient plants.

Yet the restructuring appears designed for the long term. Canadian producers are increasingly redirecting shipments to Europe and Asia. The United Kingdom, which imports billions of board feet annually, has emerged as one potential growth market, particularly as European timber supplies adjust to the loss of Russian exports. Japan and South Korea, each with distinct grading standards, are also drawing attention as Canadian mills invest in equipment to meet regional specifications.

Trade economists note that once supply chains and buyer relationships are reoriented, they are rarely reversed quickly. Even if tariffs were eased, Canadian producers might find it less risky to maintain diversified markets rather than depend heavily on a single customer subject to shifting trade policy.

American mills, for their part, have welcomed the tariffs as a corrective to what industry advocates describe as unfair pricing practices by Canadian producers. Higher duties can translate into improved margins on domestic output. But capacity constraints remain. Expanding sawmill production requires years of capital investment, regulatory approvals and workforce development.

The arithmetic is straightforward: with domestic output near 58 billion board feet and consumption closer to 70 billion, the shortfall persists. If Canadian imports diminish or become structurally more expensive, the burden ultimately shifts to builders and buyers.

The broader social consequences are already visible. As homeownership becomes less attainable for many young families, rental demand intensifies. Multi-generational households are becoming more common. Each year of underbuilding compounds the existing shortage, raising the stakes of policy decisions that might otherwise be viewed as sector-specific trade disputes.

The softwood lumber conflict has recurred periodically for decades, but this round appears to be catalyzing deeper structural changes. Canada is investing heavily in domestic procurement and new export corridors. The United States is attempting to shield its producers while confronting a persistent housing deficit.

Whether Washington revisits its approach may depend on how sharply housing affordability deteriorates and how quickly domestic mills can scale. For now, a tariff intended to protect one industry has reshaped a continental supply chain — and added another layer of complexity to an already strained housing market.