On April 3rd it was announced that Canadian lumber would be spared the 25% reciprocal tariff and, with that, a collective sigh of relief coursed throughout the industry. However, the celebration was short lived as the very next day an announcement was made by the United States Department of Commerce (USDOC) that the long-standing Softwood Lumber Agreement (SLA), with its 14.40% combined Countervailing (CVD) and Anti-Dumping (AD) duties against Canadian lumber mills, had undergone an annual review and that a new collective 34.45% rate would be meted out. Although it was stated that “the rate collected at the border will not change until Commerce releases it’s final administrative review, which is expected in about six months”, the news of a 20.05% increase weighed heavily on the market and the delay brought little comfort. With changes to the proposed and current tariffs occurring at such a rate that the ink hasn’t had time to dry on the statutes, what may occur over the next six months is anyone’s guess. The constant volley this year of the reciprocal tariffs being “on” or “not on” has deadened the senses of many buyers and traders, and the uncertainty of the direction of the economy did not instill any confidence that business would be good for the second quarter, or even for the third. As the saying goes, “when in doubt, do nothing” and that seems to be where every one is precariously sitting right now, trying to keep their inventories from being too lean or too heavy, their prices from being too low or too high, and refraining from passing on every single newly printed news article about tariff activity for the sake of risking credibility with their customers. As of print, business has softened as mortgage rates, stock market volatility and the general uncertainty of where this boat is heading has cooled the housing market and, subsequently, lumber sales. For May, we anticipate that prices will likely soften in this uncertain market as the industry takes stock, but many mills are already talking about early summer closures and curtailments, which could easily tighten supply and firm up prices.
The lumber industry fought the good fight against the 25% reciprocal tariff but, in the end, here we go with a similar upcharge on a tariff that has been in place since the 1980’s….and to which most feel that rallying against would be as useless as arguing with the IRS over tax non-payment. As the subject of tariffs, the economy, the housing market, and the direction it all continues to head in continues to consume more of our valuable time, energy and headspace, there comes a point at which one must throw down the worry. To quote Mark Twain “Worrying is like paying a debt you don’t owe” and, particularly this year, we have all paid well more than what we owe to the tariff cause. The incalculable meetings, sleepless nights and Rolaids consumed over what would or could occur with higher lumber prices were for naught (and we are most grateful for that), but with the introduction of the potential SLA adjustments, we could be back to square one. In the end, the price will be the price, product for product as the market will ultimately determine what something should cost. There will be a transitional period in which margins and profits will be harmed until the market seeks its level, and then it’ll be back to “normal” again. As we’ve experienced with other tariffs that have gone into place (particularly against China-supplied steel and aluminum) and what we endured during the Great Recession and the Pandemic, the initial upset is jarring, frustrating and painful. However, if a company is pricing their items fairly (and can do so), they should increase them in increments, gradually working off average costs rather than passing on the full increase all at once. As a supplier dedicated to our customers’ success, it is our duty to protest any adjustments that will put us in a worse position. However, tariffs are a literal tax and most of the time there is little that anyone can do to combat against a tariff-borne price increase. In the end, what matters most is what we can control, and that is our dedication to exceptional service and to high quality products; by no chance or mistake, do either come easily: they are difficult to achieve and even harder to maintain. Nonetheless, we know that they are the true differentiators of a poor, good or a great company. As most experienced contractors know, at Shepley, it’s 100% clear that our philosophy is to lead with service and quality while we fight the fight, every day and with every one of our suppliers, for the most competitive pricing we can possibly attain.
By far and large, all local lumber yards must rely upon the same suppliers, who compete on the wholesale level with the same or related products. Whenever we hear of a big spread in pricing against another lumber supplier, we don’t get rattled: we are confident that our pricing reflects the quality of our product at a fair, competitive price for what it is, and that our service is delivered through a work ethic that is instilled, maintained and managed by a team of fine managers. We are the award-winning (2024’s Official Community Choice Award for BEST Employer) “Passionate professionals who dare to care,” who enjoy the challenge of exceeding expectations. While pricing fluctuates, you can rest assured that our commitment to service and quality will never waver. Thank you for your business!