Recent decisions from the U.S. Department of Commerce are poised to create significant financial implications for homebuilders and remodelers. This analysis will detail these recent developments.
Increased Duties on Canadian Softwood Lumber
On August 8, 2025, the U.S. Department of Commerce announced its final determination in the annual administrative review of softwood lumber from Canada, covering imports from January 1 to December 31, 2023.
The Department determined that Canadian softwood lumber continues to be unfairly subsidized. The new countervailing duty rates have been set between 12.12% and 16.82%. This represents an increase from the previous review, with most Canadian companies now facing a rate of 14.63%, up from 6.74%.
When combined with the existing anti-dumping rate of 20.6%, the total tariffs on Canadian lumber will now reach 35.2%, a substantial increase from the previous total of 14.4%.
New Tariffs Citing National Security Concerns
In a subsequent announcement, the U.S. Commerce Department has imposed additional tariffs, citing “national security risks.” Effective October 14, 2025, a 10% tariff will be applied to all timber and lumber imports. Furthermore, imports of kitchen cabinets and furniture will be subject to a 25% tariff, which will increase to 30% for furniture and 50% for cabinets by January 1, 2026.
For Canadian lumber, this introduces an additional 10% tariff, elevating the total duties to 45%. These tariffs are being implemented under Section 232 of the Trade Expansion Act of 1962, which grants the president the authority to enact trade restrictions in response to perceived national security threats. While the 10% tariff on lumber is lower than some other Section 232 tariffs, it remains a significant development for the industry.
Market Implications
The United States relies heavily on imported lumber, with about one-third of its total consumption sourced internationally to meet domestic demand. Canada supplies nearly 85% of these critical imports. Regions like the Northeast and Midwest are particularly dependent on Canadian softwood lumber for framing, largely because it is well-suited for construction and often more cost-effective to transport than lumber from the U.S. South or West. Therefore, despite significant domestic lumber production, the U.S. does not produce enough, nor the right mix of species, to fully replace the Canadian supply. Consequently, these new tariffs are expected to have a direct and tangible impact on housing costs nationwide.
Current Lumber Price Trends
For the week ending September 19, 2025, market data indicated the following:
• Framing lumber composite price: Decreased by 1.6% (-6.5% year-over-year).
• Lumber futures price: Increased by 4.6% (+11.5% year-over-year), though it is down 5.4% from the previous month.
• Structural panel composite price: Decreased by 0.9% from the previous week.
▪ OSB prices decreased by 0.4%.
▪ Western Fir plywood prices remained stable.
▪ Southern Yellow Pine (SYP) plywood prices decreased by 1.3%.
Impact Timeline for Builders
The transmission of price changes from the mill to the builder is not immediate. For homebuilders and remodelers to realize lower prices, mill prices must decrease substantially and remain at those lower levels for a sustained period. A temporary drop is often insufficient to lower a supplier’s average inventory cost after a price surge.
This delay can range from several weeks to a few months, depending on the consistency of price decreases and market stability. Factors such as the size of the building firm, the supplier, and the business relationship also influence how quickly price changes are reflected. Larger firms with greater purchasing power may experience these adjustments sooner.
Conclusion
The new, higher tariffs are expected to increase construction costs. As lumber prices rise, the cost of building new homes and executing renovation projects will likely follow suit. This presents a challenging environment for the construction industry, with ripple effects anticipated across the supply chain, ultimately impacting home buyers.
We invite industry professionals to share their perspectives on these new tariffs and their potential impact on the housing market.
References:
International Trade Administration. (n.d.). Commerce Department Announces Final Results of the Fifth Administrative Reviews of the Softwood Lumber Countervailing and Antidumping Duty Orders on Imports from Canada. U.S. Department of Commerce. Retrieved from https:// www.trade.gov/press-release/commerce-department-announces-final-results-softwood-lumber-canadacountervailing
National Association of Home Builders. (n.d.). Framing Lumber Prices. Retrieved from https:// www.nahb.org/news-and-economics/housing-economics/national-statistics/framing-lumber-prices
National Association of Home Builders. (2025, September). Section 232 Tariffs. Retrieved from https://www.nahb.org/blog/2025/09/section-232-tariffs
