Lumber futures rose toward $680 per thousand board feet, approaching a two-and-a-half-year high of $685 seen on March 24th, driven largely by the looming threat of additional tariffs. Proposed increases could raise Canadian lumber duties from around 15% to nearly 40%, a critical factor given that Canada supplies roughly 25% of U.S. lumber—even as some production has migrated to the U.S. South. Meanwhile, year-over-year, the housing market reveals modest contractions, with housing starts declining by 3% compared to the previous year and new home sales exhibiting similar softness, even as existing home sales show relative stabilization. This backdrop of enduring supply constraints—exacerbated by transportation delays and inventory hoarding—combined with the persistent, albeit slightly subdued, demand in the construction sector, underscores a market environment where tariff-driven supply pressures support elevated lumber prices amid ongoing uncertainty.
The ongoing trade spat between the U.S. and Canada is impacting BC’s construction sector in ways that could bring short-term gain and long-term pain. At first, there could be an oversupply of lumber if Canadian softwood is taken out of the U.S. equation, resulting in lower costs for B.C. builders and developers, said Padraic Kelly, Vancouver-based director with BTY Group. But costs would later rise significantly, he said. “The medium- and long-term pain would be that if the American market is choked out, mills would close, supply would be constrained and costs would ultimately go up,” Kelly said. The total levy on Canadian softwood lumber going into the U.S. could total between 45% and 55%, taking into account anti-dumping measures introduced by the Biden administration and scheduled to increase this August. Other big-ticket impacts to B.C. construction could be the mechanical and electrical divisions within construction budgets, he said.