Timber prices reached an all-time high in March, taking them to over USD 650 per thousand board feet. This marks the highest level in two and a half years and has far-reaching implications for the construction industry and the timber trade.
The main reason for this dramatic price increase is the rise in US tariffs. The Trump administration has decided to increase tariffs on Canadian timber imports by 25 %, in addition to the 14.4 % already in place. These significant steps have had a considerable impact on the market and changed the cost structure for American customers.
Canada, which as a major supplier provides around 30% of the sawn timber consumed in the USA, sees its competitiveness severely impaired by these tariffs. While Canadian suppliers are faced with the challenge of offering their products at competitive prices, US buyers have to cope with the increased prices, which in turn affects the end consumer and the construction industry.
The effects of the tariff policy are far-reaching. North American production of lumber has declined by 3.1 billion board feet. This represents a significant decline, which is increasingly leading to an imbalance between supply and demand and thus also driving price volatility.
Many sawmills, especially in Canada, were unable to continue operating economically under these circumstances and had to close. This is not only a consequence of the increased customs costs, but also of the general rise in operating costs. The closures have cost jobs in the region and had a negative impact on the local economy.
While this tariff policy has been met with much criticism, there are also voices that support it. The U.S. Lumber Coalition, a Washington-based organization, supports the tariff measures and sees them as a way to stabilize the U.S. lumber industry. The group argues that these protective measures will ensure fair competition and promote domestic production.
Andrew Miller, CEO of Stimson Lumber Co., was positive about the tariffs. He sees the measures as an opportunity to give the US timber industry more stability and at the same time reduce dependence on imports. However, these comments are in stark contrast to the protests of the Canadian timber industry and numerous construction companies in the USA, which are also experiencing difficulties due to rising costs.
The debate over the right measures to protect and promote domestic markets is complex. While some sectors benefit from such tariff mechanisms, others suffer from the negative impact on international trade and rising costs for the end consumer.
The development in the timber industry is representative of many similar challenges in the global economy, where protectionism is increasingly coming into conflict with free trade. The coming months will show how these tariffs will affect the long-term structures and dynamics of the North American timber industry.
