The National Association of Home Builders (NAHB) in the United States has raised alarms regarding the rising costs associated with increased import taxes on Canadian softwood lumber. NAHB chairman Buddy Hughes indicated that these higher duties and tariffs are exacerbating the financial pressures on the construction industry, which is already grappling with rising material and labor costs.

The construction sector is experiencing sluggish sales, with two-thirds of builders reportedly offering incentives to attract buyers. Despite a slight uptick in the NAHB/Wells Fargo Housing Market Index, overall sentiment remains negative, with the index reflecting a lack of confidence among builders. Recent surveys indicated that 40 percent of builders reduced prices in December, averaging a 5 percent decrease.

The NAHB's warnings about inflationary pressures contrast with the views of the U.S. Lumber Coalition, which includes companies like Weyerhaeuser Co. The coalition contends that the impact of U.S. import taxes on consumers has been overstated, asserting that softwood lumber constitutes a minor portion of the total costs of new housing, which also includes land value.

For decades, the U.S. government has criticized Canada's forestry management system, where most forests are Crown land and logging companies pay stumpage fees to provincial governments. The U.S. Department of Commerce claims these fees provide Canadian companies with an unfair competitive advantage over U.S. firms, which primarily harvest timber from private lands.

The Canadian government has rejected these claims, asserting that Canadian producers do not benefit from subsidies or engage in dumping practices. In response to the ongoing trade tensions, Canadian Energy and Natural Resources Minister Tim Hodgson announced the formation of the Canadian Forest Sector Transformation Task Force, aimed at enhancing the sector's global competitiveness and domestic needs. This task force will be led by industry leaders and is expected to operate for 90 days.

The Canadian government has also introduced $2.35 billion in financial support for the forestry industry since August, including loan guarantees and grants to help diversify markets and reduce reliance on the U.S. market. However, various forestry groups have expressed dissatisfaction with the pace of these financial supports.

The softwood lumber market remains volatile, with U.S. producers claiming that current prices are relatively low compared to historical standards. Benchmark lumber prices have decreased by approximately 75 percent from the peak levels seen in spring 2021, which were driven by a surge in demand during the COVID-19 pandemic.

Currently, U.S. sawmills account for about 70 percent of domestic lumber consumption, while Canada supplies 24 percent. The ongoing Canada-U.S. softwood lumber dispute has persisted since the early 1980s, with Canadian companies paying over $10 billion in U.S. duties since 2017. Presently, U.S. import taxes on softwood lumber from Canada stand at 45.16 percent for most producers, with additional anti-dumping and countervailing duties imposed.

The U.S. government has implemented these tariffs under national security concerns, as outlined in Section 232 of the U.S. Trade Expansion Act. New tariffs on upholstered furniture and kitchen products have also been introduced, further complicating the landscape for Canadian forest products. These tariffs are set to increase again in January 2026, potentially intensifying the challenges faced by the Canadian forestry sector.