As investors struggle to understand the implications of trade wars and the current tariff regime in the US, we offer our thoughts on the likely impacts (broken down by commodity). We note that trade parameters continue to change dramatically (e.g., tariffs blocked by the courts but then overturned on appeal). To be clear, tariffs are taxes on imports, with the degree of cost-sharing between importer and exporter determined by supply and demand. Some commodities experienced pre-tariff demand pull-forward, but, across the board, tariffs have reduced buyer appetite for any inventory accumulation and have had a generally chilling effect on investment, planning and normal business activity. We note that the ongoing Section 232 investigation into timber and timber products is sure to target lumber, but it may also expand to many others forest products. Uncertainty is now a constant in the sector. 

Timber and Log Prices: Log prices are flat to down in most regions as end markets struggle. Timberland values have been robust. Tariff Exposure — Low impact to date; this is given that US–Canada log trade is not tariffed and China previously banned the import of US logs. Timberland owners would be net beneficiaries of restrictions on imported wood products, however. 

Solid Wood Prices: SYP lumber prices have rolled over in recent weeks, while S-P-F appears to have found a near-term floor after declining through March and April. SYP 2x4s are trading at ~$416, off from a year-to-date high of $467 at the start of May. S-P-F 2x4s are at ~$443, up $13 over the past three weeks but $120 below the peak seen in March. Lumber demand will slow seasonally through the summer months, but the price risk over the medium term is weighted to the upside given the upcoming increase in softwood lumber duty rates and the potential for incremental tariffs. OSB prices were in freefall across all regions this month, with supply running comfortably ahead of demand. The benchmark NC 7/16″ price has declined by $50 (to $255) over the past month. With OSB prices slipping toward cash-cost levels, mill downtime is likely; however, the outcome of the Section 232 investigation may dictate where that downtime occurs (i.e., Canada or the US). In plywood, prices have ticked higher in both the South and the West this month amid a more balanced supply and demand picture. Tariff Exposure —Tariffs on Canadian lumber imports are on hold pending the outcome of a Section 232 investigation. However, the long-standing softwood lumber dispute rumbles on; with duty rates set to more than double in the second half of 2025, price risk for S-P-F appears to be upside-weighted from current levels. SYP producers—and perhaps to a lesser extent European lumber exporters—should benefit from a drop in the volume of S-P-F going to the US when/if higher duties/tariffs are implemented. OSB and plywood could also be impacted by the Section 232 outcome. In OSB, a tariff on Canadian imports would likely see needed mill downtime north of the border.

Pulp Prices: Prices initially stabilized following the US– China tariff pause but have since weakened further, suggesting little recovery in Chinese buyer confidence. Chinese NBSK imports have found transactions at $710–720, while BHK is sub-$520. We expect downtime announcements will be forthcoming, heavily weighted to softwood. North American conditions are mixed and unsettled, likely with lower European supply and greater Canadian availability. In Europe, NBSK is sticky near current levels given high costs and the threat of shuts, while BHK is slipping. Tariff  Exposure — We expect the 10% U.S. tariff on non-Canadian imports to raise prices in the U. for hardwood pulp. For NBSK, tariffed European supply may increase demand for Canadian supply in eastern North America, while, in the West, lower Chinese demand (amid lower producer confidence) may increase North American supply as volumes are redirected.

Paper Prices: All is quiet on the pricing front this month, with paper prices stable across the board and no talk of price hikes (or declines). There is still the odd deal to be had (sometimes on imports), but that is typical in the market. Tariff fears appear to be encouraging more imports for now. Demand has been contracting in almost every grade except uncoated mechanicals (which posted positive results for April). Newsprint prices are stable, on average. Tariff Exposure — The volume of European imports is set to decline, shifting demand to NA suppliers. Given the importance of imports for many paper grades, tariffs could lead to higher prices; however, such prices would merely accelerate the declines in secular demand (short-term gain but long-term pain)

Packaging Prices: Box demand was poor in Q1, with broad macro trends not pointing to a much better Q2. Containerboard prices have come under pressure over the past month or two, with suggestions that some (all?) of the January price hike could be lost. However, several producers have announced capacity reductions that should be sufficient to push up operating rates. Kraft linerboard prices ought to be able to hold steady now (with most closures centred on this grade). Boxboard production fell in Q1, with SBS eking out a small gain and others dropping (recycled was down especially hard). Macro concerns persist, with producers ratcheting down volume expectations for the year. Tariff Exposure ——Low domestic consumer confidence and declining exports have contributed to lower paperboard demand, and surely aided in the accelerated domestic capacity closures in containerboard and boxboard. Boxboard imports are likely to fall if tariffs ramp up, but to date weaker domestic demand from food & beverage markets has been the greater headwind.