Lumber prices hit four-year high of $535 on tariff-driven supply cuts

Lumber prices reached $535 per thousand board feet in July, the highest since September 2022, as tariffs and sawmill closures tightened supply.

"Given softwood lumber demand to date is pretty much flat, the supply side is clearly doing most of the work to push prices up this year," Dustin Jalbert, director of wood products and timber at Fastmarkets, said.

Canadian softwood imports fell 15% through May from a year earlier, according to Foreign Agricultural Service data. Combined antidumping and countervailing duties on Canadian lumber more than doubled last year to about 35% for most producers, with Trump's 10% Section 232 tariff layered on top. Dozens of sawmills have closed across the U.S. and Canada, including Canfor's permanent shutdown of its Fox Creek mill in Alberta by end of September.

Home builders including D.R. Horton and Meritage Homes say the run-up will push up costs of houses sold later this year. Lumber futures are down about 12% from their late-July high, suggesting prices may have peaked for 2026.

35% Duties and Sawmill Closures Tighten Supply

The U.S. Lumber Coalition, which has fought for the duties, says the import taxes have enabled U.S. producers to add more than eight billion board feet of sawmill capacity over the past decade and boost their share of the domestic market to 75%. Canadian lumber's share has shrunk to about 19%, from more than 30% in 2016, the trade group says. Another $500 million of investments in U.S. sawmill capacity have been announced since Trump added the 10% softwood lumber tariff last autumn.

"The positive impact of the antidumping and countervailing duty measures coupled with President Trump's Section 232 tariffs has been nothing short of historic, and as such must be maintained," Zoltan van Heyningen, the group's executive director, said.

Canfor announced last week it would permanently shut its Fox Creek sawmill in Alberta by the end of September, citing persistently weak wood markets, difficulties with log supply related to wildfires and the mountain pine beetle, as well as the U.S. duties and tariff. "I don't anticipate that those mills that have been shut down are going to come back," Weyerhaeuser Chief Executive Devin Stockfish told investors last week. "There's a certain amount of volume that's just out of the system."

The new duty rates are set to come down later this year. Though not finalized before later this month, the preliminary combined rate is about 25%. Stockfish said the roughly 10-percentage-point reduction won't be enough to significantly boost shipments across the border. European imports, which rose in recent years when suppliers raced to salvage logs from forests damaged by wind, fire and pests, have also declined.

The benchmark at $535 remains 23% above year-ago levels, though well below the record spike during the Covid pandemic. Kurt Yinger, an analyst with D.A. Davidson, said lumber prices "now approximate what will ultimately be their highs for the year with seasonal factors and rising mortgage rates likely to weigh on the demand side."

This article is for informational purposes only and does not constitute investment advice.