Jul 29, 2026
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Add us on GoogleCanadian wildfires are driving up the price of wood products that the U.S. construction industry depends on — with knock-on effects on housing.
Western Spruce Pine Fir futures were selling for $653 per thousand board feet in late July, not far off last year’s high, according to Lumber Flow, and up from a low of $524 in late January. The 937 wildfires threatening forests throughout British Columbia are driving that increase.
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Alex Strong, senior federal legislative director at the National Association of Home Builders (NAHB), said President Donald Trump’s proposed 50% tariff on Canadian goods is adding to uncertainty around the supply chain.
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Set to take effect Aug. 19, the 50% tariffs would directly apply to Canadian plywood, fiberboard and other wood-derived products used in homebuilding. Canada is one of the top suppliers of fiberboard to the U.S. — accounting for $369.48 million in sales last year.
Derek Nighbor, president and CEO of the Forest Products Association of Canada, told the Canadian Press that the country is also America’s third-largest supplier of plywood. The Canucks exported $403.52 million of it in 2025.
Nighbor warns that the tariffs will have a direct impact on housing construction. The U.S. Congress Joint Economic Committee warned that Trump’s tariffs on a range of materials (including wood products) could increase building costs by $10,900 per home.
“It just means lower housing activity in the U.S. and higher costs for Americans,” he said.
Here’s a look at how dire the situation really is.
Multiple factors choking the supply chain
U.S. homebuilders already pay an effective tariff rate of about 35% for Canadian softwood lumber. In April, the U.S. Department of Commerce announced it might actually cut that to 25% in August — something that the NAHB hails as good news.
But much depends on trade negotiations with Canada over the proposed 50% tariffs and the U.S.-Mexico-Canada Agreement. Softwood lumber has always been a sticking point.
“With housing affordability already near historic lows, we continue to urge the Trump administration to exempt building materials from its broader tariff strategy and avoid new trade barriers that could worsen the housing crisis,” the NAHB wrote.
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Even if the U.S. does reduce tariffs on Canadian softwood lumber, there’s another supply chain problem: Lumber mills and pulp mills are closing in British Columbia. Since 2023, 21 lumber mills have shuttered.
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How bad things could get and what to do about it
Home builders can always find alternative sources for lumber and wood products. Lumber Flow suggests buying Southern Yellow Pine from the U.S. South, though greater demand for it could drive up its price too.
Chile is another source of wood products, supplying $868-million worth to the U.S. in 2025.
And according to researchers at Louisiana State University and USDA Forest Service, the impact of tariffs on Canadian softwood lumber may abate over time, easing the pressure on home builders and home buyers.
They set out to connect the impact of tariffs on Canadian softwood lumber with the cost of construction and mortgage payments for a $420,000 home.
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Assuming a standard $2,190 monthly mortgage payment, they estimated that a $25% tariff on Canadian softwood lumber increases a homeowner’s monthly mortgage payments by up to $41.
But over time, the market adjusts (for example, by finding alternative sources for wood), and the impact of the tariff lessens.
What has a far bigger impact is interest rates. If the U.S. Federal Reserve drops mortgage rates by just 19 basis points, the impact of tariffs on Canadian lumber disappears.
“Our results show that for housing affordability, monetary policy dominates trade policy, with critical implications for the ongoing U.S.-Canada softwood lumber trade dispute,” the researchers wrote.
That means that the Fed’s decision about mortgage rates on July 29 could be one the most important factors at play in the ongoing impact of Canadian lumber prices on home builders and buyers in the U.S.
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Laura Boast is a Senior Reporter with Moneywise.com and a lifelong content creator who has reached international audiences at Discovery, CBC, Blue Ant Media, Bond Brand Loyalty and more.
