U.S. Lumber Prices Are Down About 14% From Last Year Despite Heavy Duties on Canadian Wood

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Tariffs are designed to make imported goods more expensive, yet the U.S. lumber market is sending a more complicated signal. CME lumber futures closed at about $526.50 per thousand board feet on October 2, roughly 14.5% below their level a year earlier, even as many Canadian softwood shipments face U.S. trade measures approaching a combined 45%.

The apparent contradiction says a great deal about the housing economy. Heavy duties can make Canadian lumber more expensive to bring across the border, but they cannot guarantee higher market prices when builders are confronting weak buyer traffic, expensive mortgages and uncertain demand. At the same time, Canadian mills are cutting production and European suppliers are gaining ground. Lumber has become a striking example of how tariffs, housing conditions and global supply can pull prices in different directions.

The 14% Drop Is Real—But It Is a Futures Benchmark

The headline decline comes from the benchmark lumber-futures market. CME lumber futures closed at $526.50 per thousand board feet on October 2, 2026, their lowest closing level since November 2025. That was approximately 14.5% below the $615.50 level recorded a year earlier. The slide continued into the first full week of October, with the contract trading near the low-$520s. It is a meaningful drop because futures markets reflect what traders expect lumber to be worth for delivery under specified contract terms, making them an important gauge of market expectations.

However, that figure should not be confused with the price of every bundle of framing lumber at a U.S. home-improvement store. Futures, producer prices, wholesale quotes and retail prices measure different points in the supply chain and can move differently. Freight, regional availability, species, dimensions, dealer inventories and contracts all affect the price ultimately paid. The striking part is not that every piece of lumber became 14% cheaper, but that a closely watched benchmark weakened substantially despite an unusually heavy trade barrier against Canada’s supply.

Canadian Lumber Still Faces a Tariff Wall Near 45%

For Canadian producers, the trade burden remains substantial. The prevailing combined U.S. antidumping and countervailing duty rate for companies covered by the current “all others” rate is 35.16%. Since October 14, 2025, the United States has also imposed a 10% Section 232 tariff on certain softwood timber and lumber. When a shipment falls within the scope of both measures, those charges stack, taking the combined burden for an exporter subject to the 35.16% rate to roughly 45.16%. Individual companies can face different rates, so 45.16% should not be treated as a universal tariff on every Canadian board entering the country.

The dispute stretches back decades and involves fundamentally different forestry systems. U.S. producers have argued that Canada’s largely provincial system of timber ownership and stumpage fees gives Canadian mills an unfair advantage, leading Washington to impose countervailing and antidumping duties. Canada has repeatedly disputed those conclusions and challenged U.S. measures through trade mechanisms. Even the Congressional Research Service has noted that direct comparisons are difficult because the two countries differ in land ownership, pricing systems, timber species and other operating conditions. That long-running disagreement now sits alongside the newer national-security tariff.

High Mortgage Rates Are Overpowering the Tariff Effect

A tariff can restrict supply or raise an importer’s cost, but lumber still needs buyers. That is where the U.S. housing market has become critical. The average 30-year fixed mortgage rate reached 7.28% on October 1, according to Freddie Mac. One year earlier, the comparable rate was 6.34%. On a $300,000 mortgage, even a roughly one-percentage-point change in financing costs can materially increase the monthly payment, reducing what prospective buyers can afford and making builders more cautious about starting projects.

Construction statistics show why lumber traders are paying so much attention to demand. U.S. housing starts ran at a seasonally adjusted annual rate of 1.275 million units in August, down 1.2% from a year earlier. New single-family home sales were running at 684,000 annually, 2% below August 2025, while builders had an estimated 8.5 months of new-home inventory available at the current sales pace. Those figures contain normal statistical uncertainty, but the broader picture is clear: the housing industry is not experiencing the type of demand boom that would automatically force lumber prices higher. Weak affordability can therefore outweigh some of the upward pressure created by tariffs.

Canadian Mills Are Feeling the Pressure in Their Own Output

Falling U.S. lumber benchmarks do not mean the tariffs are painless for Canadian producers. Statistics Canada’s latest sawmill figures show that Canadian lumber production fell to 3.546 million cubic metres in July 2026, an 8.6% decline from June and a 6.7% drop from July 2025. Shipments totaled 3.729 million cubic metres, down 10.3% from the previous month and 7.8% from a year earlier. Those are notable declines for an industry in which operating sawmills efficiently often depends on keeping large volumes moving through expensive facilities.

The business problem is straightforward. A Canadian mill selling into a softer U.S. market may have limited ability to pass the full cost of duties to customers. If the market price does not rise enough to compensate, more of the burden can be absorbed through lower net returns, squeezed margins or reduced production. For forestry communities, that turns an abstract trade percentage into decisions about operating schedules, capital spending and mill utilization. Lower production can eventually tighten supply, but that adjustment does not happen instantly. For now, falling Canadian output and falling U.S. futures are occurring simultaneously, which suggests producers are responding to a market where demand is simply not strong enough to absorb wood at substantially higher prices.

Canada Remains Too Important to the U.S. Market to Replace Easily

Despite the tariffs and declining shipments, Canada remains deeply embedded in the American lumber supply chain. National Association of Home Builders data show that the United States consumed roughly 48.1 billion board feet of softwood lumber in 2024. Domestic production supplied about 35.1 billion board feet, while approximately 11.9 billion board feet came from Canada. On those figures, Canadian lumber represented 24.7% of total U.S. softwood supply, while imports from all countries accounted for 29.1% of consumption.

The flow remains substantial in 2026. Global Affairs Canada’s September export report recorded approximately 769.8 million board feet of Canadian softwood lumber shipped to the United States during the month. British Columbia’s interior alone accounted for roughly 227.6 million board feet, followed by Alberta with about 151.2 million and Quebec with 124.4 million. For comparison, the report listed expected U.S. consumption for September at about 3.982 billion board feet. Different sources and periods should not be mixed into an exact market-share calculation, but the numbers illustrate the scale involved. Replacing hundreds of millions of board feet every month requires either significantly more U.S. output, greater overseas imports, lower consumption, or some combination of the three.

European Mills Are Taking Some of the Business Canada Is Losing

One consequence of the trade barriers has been a gradual reshuffling of America’s overseas suppliers. Lesprom Analytics reported that Canada’s share of U.S. softwood lumber imports fell 4.7 percentage points year over year in January 2026, while Sweden’s share increased 6.2 percentage points and Finland gained 0.2 points. Total American imports were also falling, so the change did not simply represent a booming U.S. lumber market. It showed European producers gaining relative ground while Canadian shipments weakened.

Trade policy helps explain why European lumber can be more competitive than the headline Canadian duty rate might suggest. Under the U.S. wood-products tariff framework announced in 2025, applicable wood products originating in the European Union and Japan receive treatment intended to cap the combined Section 232 and normal tariff rate at 15%. Canadian softwood caught by both the existing trade-remedy duties and the Section 232 measure can face a much larger combined burden. Europe is not a perfect replacement for Canada—ocean freight, delivery times, product specifications and currency movements matter—but the tariff difference gives overseas mills a stronger incentive to pursue U.S. buyers. Protection aimed at Canada can therefore shift some sourcing abroad rather than automatically transferring every lost Canadian board to an American sawmill.

Cheaper Lumber Futures Do Not Automatically Mean Cheaper Houses

For home buyers, the decline in lumber futures sounds encouraging, but lumber is only one component of the cost of delivering a finished home. A July 2026 survey conducted through the NAHB/Wells Fargo Housing Market Index found that builders reported a median 6.7% increase in material costs for building the same house compared with the previous year. Nearly 73% of respondents said their material costs had risen by as much as 15%. The Bureau of Labor Statistics also reported that overall final-demand producer prices were 5.4% higher year over year in August.

Builders have to account for far more than framing lumber. Concrete, drywall, mechanical systems, windows, roofing, land, development charges, skilled labour, insurance and financing all contribute to the final cost. Even within lumber, an exchange-traded futures contract does not immediately determine what a builder pays a local supplier. That helps explain why a falling futures benchmark can coexist with builders reporting higher overall material expenses. Lumber relief may improve one line of a construction budget, but it cannot by itself offset a 7%-plus mortgage environment or the broader cost pressures affecting residential construction.

Weak Builder Confidence Helps Explain Where Prices Could Go Next

September offered another sign that demand remains the decisive variable. The NAHB/Wells Fargo Housing Market Index fell three points to 32, its lowest level since September 2025. Any reading below 50 indicates that more surveyed builders view conditions as poor than good. Thirty-eight percent of builders reported cutting home prices during the month, while 66% said they were using sales incentives. Those measures show an industry working hard to attract buyers rather than one struggling to keep pace with runaway demand.

That environment matters enormously for lumber. If mortgage rates decline and home sales recover, builders could begin increasing starts and replenishing lumber inventories, quickly adding demand to a market where Canadian production has already contracted. The opposite is also possible: persistently high borrowing costs could keep construction subdued and prevent tariffs from producing the price increases suppliers might otherwise expect. Futures prices are therefore reflecting more than trade policy. They are effectively balancing the cost of restricting Canadian wood against uncertainty over how much lumber America’s housing industry actually needs. At the moment, the weakness on the demand side is proving powerful enough to keep that benchmark well below last year’s level.

Washington’s Next Duty Decision Could Change the Equation Again

There is another important variable approaching. The seventh U.S. administrative review of Canadian softwood lumber duties has produced post-preliminary rates that are noticeably lower than the duties currently being collected. For non-selected companies, the post-preliminary combined antidumping and countervailing rate was 25.18%, compared with the prevailing 35.16% “all others” rate. Those preliminary numbers are not yet effective; Global Affairs Canada says only the final results change the applicable rates, with final results expected as late as October 2026.

If something close to 25.18% became final, a covered shipment also facing the 10% Section 232 tariff would still confront a combined trade burden of roughly 35%, assuming both measures apply. That would be lower than today’s roughly 45% burden for exporters on the current all-others rate, but still significant. The larger lesson from the present market is that the duty rate alone does not determine lumber prices. Trade barriers, Canadian production, European competition, U.S. mill capacity, mortgage rates and housing construction all meet in the same market. Right now, those forces have produced an unusual result: Canadian lumber is heavily taxed at the border, while the main U.S. futures benchmark remains substantially cheaper than it was a year ago.

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