Lumber Markets on Alert as Tariffs on Canadian Wood Products Take Effect

On March 4, the US implemented tariffs on Canadian lumber and wood products of 25%. This 25% tariff is in addition to the current 14.54% countervailing duty on lumber imports from Canada, bringing the total to almost 40%. For years the US has accused Canada of producing artificially low-priced lumber because timberland in Canada is largely owned by the government and it sets the stumpage fees. The US has argued that Canadian lumber producers benefit from artificially low timber prices while US producers pay market price for timber. The most recent policy for countervailing duties on Canadian lumber was set by the US in 2019 and revised to 14.52% in August 2024, with revised duties set for August 2025, where many expect a significant hike. It’s not clear yet if the new tariffs will last a few days, weeks, months, or longer, but prolonged tariffs and the expected increase in countervailing duties later this year could drive significant increases in lumber prices. While tariffs could have an adverse effect on lumber producers, we are leaving our fair value estimates in place.