2 min read

Could New Government's Tariff and Immigration Plans Mean More Pain than Gain for US Lumber Sector?

Could New Government's Tariff and Immigration Plans Mean More Pain than Gain for US Lumber Sector?

America has spoken and the result of the November 5, 2024, US election is a sea-change in government. The big questions now being asked are how the much-touted and boldest policy proposals of the president-elect and the Republican party will affect the economy, businesses, and the lives of ordinary Americans.

Many US industries are no doubt banking on what they expect will be a more pro-business regulatory and tax environment come inauguration day on January 20. The lumber industry can hope to reap some benefits from that, but it will also be looking for improvement in homebuilding to strengthen the lumber market’s recovery.

Economic Impacts of Proposed Tariffs and Immigration Policies

Many economists expect potential new import tariffs and other policies proposed by the incoming administration--including plans for mass deportation of undocumented immigrants--to rekindle inflation, create supply chain disruptions, and push up construction and manufacturing costs.

About one-fifth of US construction workers are estimated to lack permanent legal status, according to a recent article in Construction Dive. A workforce loss of that scale would have a widespread impact across the construction sector and the industries that supply it. With the scope and scale of the deportation plan unclear as of now, “It remains a significant wildcard for the economic outlook, with potential impacts on housing demand, labor supply, and border issues,” according to National Association of Home Builders Chief Economist Robert Dietz.

A proposed universal baseline 10% tariff on all imports to the US will affect lumber imports from major suppliers in Canada and also Europe. Duties already imposed by the US on Canadian lumber are set to increase substantially in August 2025, so an additional 10% tariff will likely put off some Canadian exporters.

About 30% of softwood lumber consumed in the US is imported. Domestically produced lumber cannot replace that volume without higher prices, pushing up housing costs and exacerbating the US housing affordability crisis that is deterring first-time buyers and diminishing the home-ownership rate for Americans under the age of 35.

Meanwhile, the threat of 60%-100% tariffs on all manner of imports from China could spark pandemic-scale supply chain disruptions that slow down housing completions and hinder the chances of US residential construction improving in 2025. Those tariffs would also hit the US repair & remodeling market, which is currently in growth mode.

North America’s softwood lumber industry in recent months has shown some signs of coming out of the slump that followed the pandemic-driven boom. Prices have inched up, along with production in some areas. However, it’s hard to see a path to a strong improvement in the lumber market without a focused effort in Washington DC to improve housing affordability.

Keeping An Eye on Industry Trends with Market Insights

As the new US administration takes power in January and begins work to implement its campaign promises, there will be many questions about the trajectory of the economy, the housing market, and the implications for a continued recovery in lumber demand and prices.

The need for reliable, accurate, and timely information about this market sector is greater than ever.

For further insights and analysis, download our latest Market Insights report "North American Lumber Industry’s Fortunes Are Tied to US Construction, Which Would Be Squeezed by Import Tariffs and Deportation of Undocumented Workers."

DOWNLOAD REPORT