Canada Refuses U.S. Lumber Demands as Housing Crisis Turns Historic

Trade tensions are increasing after Canada strongly rejected new lumber demands from the United States, setting the stage for a significant economic conflict that could worsen the housing crisis on both sides of the border.

What started as a familiar policy disagreement over softwood lumber exports—a conflict that has existed for decades—has now coincided with an unprecedented housing affordability crisis. Industry analysts say the timing could not be more volatile.

The immediate issue is the latest U.S. proposal to raise duties on Canadian softwood lumber imports, currently around 14 percent, to as high as 25 percent. American officials claim that Canadian provinces unfairly subsidize their timber industries, allowing mills to sell lumber below market rates and disadvantage U.S. producers.

Canada has denied this claim, as it has in every instance of the dispute since the 1980s, and is preparing to challenge any new duties under the United States-Mexico-Canada Agreement and before World Trade Organization panels.

“This is not about fair trade,” said Marie-Claude Bibeau, Canada’s minister of export promotion, international trade and economic development. “This is about protectionism disguised as legal language. American homebuilders need Canadian lumber. American consumers need affordable housing. These duties hurt Americans as much as they hurt Canadians.”

The figures support her argument. The United States imports approximately 30 percent of its softwood lumber, and Canada supplies roughly 85 percent of those imports. There is no immediate alternative. U.S. domestic mills, even operating at full capacity, cannot replace Canadian volume. European and South American suppliers face higher shipping costs and different species standards.

“Lumber is not a commodity you can just source elsewhere overnight,” said John D. Wagner, a construction economist and author of the Lumber Blog. “Every stick of framing lumber has to meet building codes. Canadian spruce-pine-fir is the standard for much of the U.S. market. Switch to European redwood or South American pine, and you are requalifying materials, retraining crews, and absorbing weeks of shipping delays.”

The housing crisis intensifies every disruption. The median home price in the United States now exceeds $420,000, and mortgage rates remain above 6.5 percent. Lumber accounts for approximately $15,000 to $25,000 of the cost of a typical single-family home. A 25 percent duty would add another $4,000 to $6,000 per house—on top of already unaffordable prices.

“The idea that we can tariff our way to cheaper housing is economic illiteracy,” said Jerry Howard, CEO of the National Association of Home Builders. “Every time we restrict lumber imports, builders pay more, and home buyers pay even more. The only winners are U.S. mills that cannot meet demand anyway.”

Canada’s refusal to give in is based on its own economic and political realities. The softwood lumber industry directly and indirectly employs more than 140,000 Canadians, concentrated in British Columbia, Quebec, and Ontario—provinces where the Liberal government is fighting to retain seats.

Prime Minister Mark Carney, who has a reputation for resisting U.S. trade pressure, made it clear in a recent press conference that Ottawa will not be intimidated. “We have been here before,” he said. “Every few years, Washington invents a new reason for lumber duties. Every few years, Canada wins at the WTO. And every few years, American homebuyers pay the price. This cycle ends when the United States accepts that we are not going away.”

The political dynamics in Washington are different. President Trump, who has made trade protectionism a central part of his economic message, views lumber duties as a way to reward domestic producers in swing states like Oregon, Washington, and Idaho. His trade team has shown little interest in compromise.