President Donald Trump’s warning of tariffs on Canada this weekend might result in higher lumber prices for the U.S. construction industry within a month. After the terrible wildfires, that is especially bad news for Southern California.
“Nearly immediately but almost certainly within 30 days,” Jim Cagnina, senior market analyst at brokerage NinjaTrader, told BourseWatch, timber prices are expected to rise in a number of industries, including manufacturing, residential construction, commercial and industrial development, and others.
However, he noted, price hikes “will be absorbed by the buyers one way or the other,” and the building industry would “keep driving forward.”
According to the U.S. International Trade Commission, Canada accounted for 46.2% of U.S. forest-product imports in 2021, making it the country’s largest supplier of forest products, which include lumber, paper, and other forest materials.
According to Cagnina, the CME Group’s lumber futures contract has increased by about 15% so far as a result of increased U.S. duties on Canadian softwood lumber in August 2024. He thinks comparable price rises would result from fresh tariff increases on Canadian lumber.
According to Dow Jones Market Data, lumber futures for March (LBRH25) (LBR00) delivery settled at $575.50 per 1,000 board feet on Wednesday, up almost 17% from $493, the lowest settlement in August of last year.
According to Cagnina, higher lumber prices will be more overtly represented in the report’s “commodities less food and energy” category and indirectly reflected in the consumer-price index. In the end, he warned, the increased prices will also affect the inflation statistics for personal consumption expenditures.
According to Cagnina, the imposition of tariffs at this time would be “a nightmare for Southern California,” which is still recovering from severe wildfires.
“Rebuilding is going to require massive state and federal assistance outside of traditional homeowners’ insurance,” he stated. “Hopefully, cooler heads will prevail, and the new [Trump] administration and Canada carve out relief for [Southern California] without a pound of flesh.”
Conflicts between the United States and Canada over the Softwood Lumber Agreement (SLA) have historically been “frequent,” according to Cagnina. According to a government organization called Global Affairs Canada, the two countries have persisted in seeking a negotiated solution since the SLA’s expiration in 2015.
According to Cagnina, the new government will “use new tariff proposals to negotiate a more comprehensive relationship.”
