Trump Tariffs Are Latest Inflationary Pressure For US Lumber

SEATTLE (Scrap Monster): US lumber prices, which already have risen in recent months due to lower production in Canada, could see further gains after President-elect Donald Trump's proposed tariffs on trade from north of the border.

Lumber futures in Chicago rose as much as 2.1% to $599 per 1,000 board feet Tuesday after the president-elect posted on social media that he would impose 25% tariffs on all goods from Canada and Mexico unless those countries curb the flow of fentanyl and migrants into the US. Shares of forestry companies, including West Fraser Timber Co. and Interfor Corp., fell.

Canada, the biggest foreign supplier of lumber to the US, has faced a spate of sawmill closures amid higher US duties. The addition of tariffs would further threaten US lumber supplies as the nation seeks to rebuild in areas hit by hurricanes.

“What we've seen is that any of these sorts of duties or tariffs, they just end up causing supply to go down and prices to go up, and that impacts affordability of housing,” said Kurt Niquidet, chief economist of the BC Council of Forest Industries. 

The implementation of tariffs is more uncertain than duties, which are reassessed annually, but both would delve a financial blow to Canadian producers, Niquidet said.

In the US, tariffs “will further exacerbate our nation's ongoing housing affordability crisis,” Jim Tobin, president of the National Association of Home Builders, said in an emailed statement. The association had already been expecting price spikes over the next year as housing demand increases, he said.

While the US has become increasingly self-sufficient in its lumber production, it still relies on imports from Canada to meet domestic demand. And forests in the US South, the continent's biggest lumber production region, faced losses during the recent hurricane season.

Hurricane Helene in September damaged roughly 6% of Georgia's forests, equating to about 1.47 million acres and $1.28 billion in losses, according to the Georgia Forestry Commission. 

After hurricanes Helene and Milton, housing construction in the South dropped in October as builders postponed projects, though single-family permit authorizations — a sign of future construction — rose to the fastest pace since April. 

Rebuilding efforts in hurricane-affected areas are “slowly gaining momentum” and should support strong lumber sales in late December and early next year, said Crystal Gauvin, a senior economist at Forest Economic Advisors.

Courtesy: www.ndtv.com