Weak demand combined with high inventory levels, even high tariffs are unable to save the sharp drop in American lumber prices.

Earlier this year, the Trump administration doubled import tariffs on Canadian softwood lumber in an effort to support domestic prices and promote U.S. production. However, the result has been a significant drop in prices, with lumber mills on both sides of the border scaling back production. The price of this key commodity for the construction industry has fallen 18% since reaching its peak in August, currently at its lowest point in seven months, due to sluggish housing construction activity and oversupply. This decline indicates that protectionist measures often fail to fully protect domestic industries from broader market dynamics, especially at a time when high interest rates and rising costs are putting pressure on consumers, undermining confidence, and reducing demand for new homes. Import of Canadian softwood lumber requires payment of anti-dumping and countervailing duties to address what the U.S. claims as Canada's unfair low-priced dumping of sawn timber and government support. This summer, the U.S. Commerce Department raised the total tax rate on these tariffs to 35.19%, compared to the previous rate of 14.4%. Brooks Mendell, founder of Georgia-based consulting firm Forisk Consulting, said, "U.S. producers were hoping these tariffs would bring higher price increases, but the result has not been as expected. It is clear that demand is not strong." In August, U.S. housing starts fell to their lowest level since May, as home builders reduced new construction projects due to the large inventory of homes still on the market. The key indicator of home builder confidence has been in negative territory for 16 consecutive months. The National Association of Home Builders declined to comment, but stated that lumber prices "must continue to fall long enough to allow suppliers' average costs to decrease after rising." In a letter to Trump administration officials on September 9, the U.S. Lumber Coalition, a Washington-based lobbying group, said that wood suppliers are now facing what some describe as "some of the worst market conditions they have ever seen." The coalition stated that besides weak new home demand, the industry is also struggling due to "massive oversupply." Earlier this year, Canadian and European producers rushed to ship products to the U.S. before additional tariffs were imposed, leading to oversupply. With lumber prices so low, retail lumber company Beckerle Lumber in New York can now afford next-day delivery services from its distributors at a lower cost than what it used to pay for bulk purchases from lumber mills. Company owner Stephen Beckerle said the cost of this service is lower than the cost of waiting several weeks for rail transport from lumber mills. He said U.S. lumber mills attempted to raise prices after the tariff increase, but the measure was not successful. Unable to turn a profit due to low prices, some North American factories have started shutting down. Interfor Corp., headquartered in British Columbia, announced last month that its operations in the U.S. and Canada will reduce lumber production by about 12%, and it expects other companies to take similar measures. The company's stock has already dropped 25% in 2025. On Thursday, in Chicago, the price of raw lumber futures for December delivery hit a seven-month low, with a price of $559.5 per 1000 board feet, before rebounding slightly. The price of new Southern Yellow Pine futures in the U.S. South closed at $385 on Wednesday. Dustin Jalbert, senior economist at Fastmarkets, stated that Canadian lumber mills need lumber prices to reach at least $600 per 1000 board feet to achieve balance. Mendell said U.S. producers need prices of Southern Yellow Pine to reach at least $400 per board foot. The U.S. Lumber Coalition stated that Canada needs to close more factories. The coalition is pushing for higher tariffs through an ongoing "232 investigation" to assess the national security risks posed by lumber imports. The Canadian government has promised to support its domestic lumber industry, while the lobbying group said it would object to this. The coalition's executive director, Zoltan van Heyningen, said the aid means "Canadian producers will, as usual, respond slowly to market realities, which means they should reduce production of a large amount of lumber." Crystal Gauvin, senior economist at Forest Economic Advisors, said, "As long as there is no further production stagnation on the European continent, 'buyers need not worry about their inventory levels.' Prices will continue to adjust until enough producers accept the fact of oversupply."