The longstanding trade dispute between the U.S. and Canada over softwood lumber has hinged on a critical factor: the substitutability of lumber products. A recent study by…Yifei Zhang and Barry Goodwin, economists at North Carolina State University, investigated the relationship between prices of SPF lumber from Canada and SYP lumber produced in the U.S. …The study found that when the price difference is within a 3.4% band, the products are more likely to be considered substitutes by consumers and builders. “Within this narrow price range, buyers may switch between SPF and SYP based on minor price fluctuations,” the researchers noted. However, when price disparities exceed this threshold, the likelihood of substitution diminishes, and the two products operate more independently in the market. …If Canadian lumber is only a substitute for U.S. lumber within a narrow price range, then duties and trade restrictions might have varying effects depending on current market prices.