This year has been like no other when it comes to dealing with tariffs and duties. We’ve run the frustrating and oftentimes confusing gamut of having them proposed, enacted, retracted, or adjusted, all the while trying to understand what impact may lie ahead. Perhaps not surprisingly, another one has made it over the finish line since our last report. Late on Monday, September 29th, the Trump administration announced that a global tariff of 10% would be imposed on all imports of softwood lumber and timber, effective Tuesday, October 14th, 2025. Known as the “Section 232” tariff, the proclamation states that “The Secretary (of Commerce) found that present quantities and circumstances of wood product imports are weakening our economy, resulting in the persistent threats of closures of wood mills and disruptions of wood product supply chains, among other things, and diminishing the utilization of production capacity of our domestic wood industry. Because of the state of the United States wood industry, the United States may be unable to meet demands for wood products that are crucial to the national defense and critical infrastructure…. The Secretary found that the present quantities and circumstances of the imports of wood products threaten to impair the national security as defined in section 232.” The Section 232 tariff applies to all countries of origin and is on top of the existing Softwood Lumber Act duties imposed on Canada, bringing the combined duties and tariffs to Canadian softwood lumber from 35.19% to 45.19%. As one can imagine, paying higher prices discourages sales and the initial reaction from the market was mixed. Some Canadian mills implemented the full 10% immediately but were open to counters while others were firm at lower prices. Some chose to pull out of the US market entirely. In the end, the initial flurry of activity petered out, but not before setting a new waterline for pricing. Currently, sales are lackluster, but prices are firm, largely due to the lumber mills’ efforts to reduce production, a strategy they have been trying to employ for many weeks, even prior to the Section 232 tariff. For November, we anticipate that the market will continue to be firm and likely climb if supplies continue to tighten.
Now that everyone’s pulses are up at the idea of higher lumber prices caused by tariffs and duties, it’s time to acknowledge the facts: for the first week of November 2024, the Random Lengths Framing Composite (our gauge for how prices are tracking in the market) was $430/m whereas, as of print this year, it is $391/m. It’s true: lumber prices are currently lower than they were this time last year, when only the SLA tariffs were on Canadian lumber and at 14.54%, not the 45.19% that they are today. Throwing out the outlier years for the Great Recession and the Pandemic, lumber pricing has remained remarkably stable for many years and proves to be quite resilient. According to a publication by Supply-Build Canada (formerly the Western Retail Lumber Association) titled “Impacts of Elevated U.S. Duties on Canadian Lumber in the U.S”, in 2024 Canadian softwood lumber was 25% of all U.S. softwood consumption, admittedly a large percentage and a big enough one that the current administration deems as a threat to national security. With imports “diminishing the utilization of production capacity of our domestic wood industry”, clearly the objective is to defend domestic lumber mills against having to compete with foreign lumber suppliers and to encourage their growth in the hopes that they will supplement the gap that is left in the absence of foreign lumber. Upon issue of the Section 232 tariff, some Canadian lumber mills retracted from the U.S. market altogether and decided to sell within their own borders to circumvent paying the 45.19% duty, while others chose to bear it out and simply hike up their prices. With the weak U.S. demand, the Canadian’s reaction didn’t cause as much of a ruckus as anticipated, but some objected to prices doled out by our own domestic mills (who are sans tariffs or duties), as they set prices that were on par with what the willing Canadian lumber mills were charging. Initially, it seems like an affront that a domestic mill would simply pass on duty and tariff charges that they are not paying on to an American customer. As tariff and duty charges are overt, the known percentage that they are (45.19%) seems nothing short of avaricious to pass on to a customer if the supplier isn’t incurring those same fees themselves. No one ever wants to pay more for anything, however, we have to look at the situation from all sides and, playing devil’s advocate, acknowledge that the concept behind these tariffs and duties is to set the stage for domestic businesses to yield more sales at higher margins that allow them to operate more profitably so that they can expand their operations, achieving the goal of the tariffs: to grow our domestic production capacity. It’s a respectable endeavor: everyone should choose to support American businesses but, as mentioned, few want to pay more than they must. Lucky for us, lumber is a commodity, so pricing will follow the balance between supply and demand and herein lies the key to why pricing is lower this year than it was last year, even with the tariffs: less demand, too much supply. The political side of trade negotiations, particularly on commodities, gets a lot of press: shock and awe sell. Sometimes you must relegate all that is going on to be white noise, or you can simply drive yourself nuts wishing and wondering what could or would happen with, without or in spite of the turmoil. Prices will go up, and prices will go down but, in the end, what matters is focusing on what we can control and to align yourself with a supplier that clips the peaks and valleys out of volatile periods of pricing, in order to afford you the stability that you can assuredly use for winning the next project.
The turmoil caused by tariffs and duties this year has set many on their heels, and charges such as these are initially hard to swallow for people like us who fight tooth and nail every day for the better price. Some battles must be conceded based on their scale or on principle; we are just a small company in a vast army of lumber dealers, and if these tariffs and duties help our American brothers and sisters produce more lumber for our own use, we support that 100%. We must learn to trust the process and hope that the outcome will put us all in a better position for the future. Please know that if you have any questions or concerns about your upcoming projects, your Shepley Sales Teams are ready for action. Thank you for your business!