The situation surrounding tariffs remains fluid, with a flurry of activity in Washington this week. On March 4, President Donald Trump imposed tariffs of 25% on Canadian and Mexican goods entering the U.S. and an additional 10% tariff on Chinese products, which follows an initial 10% tariff last month, according to reporting from the .
Then on March 6, Trump announced a one-month tariff delay until April 2 on all products from Mexico and Canada that are covered by the United States-Mexico-Canada Agreement (USMCA), a free trade treaty that Trump negotiated in his last term to replace NAFTA. While there is no specific language in the USMCA addressing Canadian softwood lumber, NAHB worked with the White House to ensure it was covered under the latest pause on tariff implementation.
Two essential materials used in new home construction, softwood lumber and gypsum (used for drywall), are largely sourced from Canada and Mexico, respectively. Additionally, numerous raw materials and components, ranging from steel and aluminum to home appliances, are sourced from China and are already subject to existing 301 and 232 tariffs, which add increased costs to construction that are ultimately passed on to consumers in the price of a home.
Canada, Mexico and China are America鈥檚 three largest trading partners. If the new tariffs on Mexico and Canada go into effect next month (the tariffs on China have already been imposed), they are projected to raise the cost of imported construction materials by more than $3 billion. NAHB has received anecdotal reports from members that they are planning for tariffs to increase material costs between $7,500 and $10,000 on the average new single-family home. NAHB will be surveying members to better gauge real-world impacts as suppliers adjust prices in response to proposed or imposed tariffs.
Further aggravating the situation, the prospect of 25% tariffs on Canadian products, which include softwood lumber critical to the U.S. home building industry, would be on top of the existing 14.5% lumber tariffs previously imposed by the U.S. Department of Commerce. This means that tariffs on Canadian lumber will surge to 39.5% on April 2. Moreover, the Commerce Department has signaled that it plans to roughly double the 14.5% tariff rate later this year, possibly in September, meaning that the overall tariff rate on Canadian softwood lumber could rise above 50% in the fall and even approach 60%.
Two New Executive Orders on Lumber
On March 1, the White House issued two executive orders on lumber. The first order centers on the need to聽聽and the second directive looks to聽.
NAHB welcomes efforts to eliminate barriers to domestic lumber production to reduce our reliance on lumber imports and meet home builders鈥� demand.聽The U.S. currently imports roughly 30% of the softwood lumber the nation uses because there is not enough domestic capacity to meet demand.
Trump鈥檚 directive to examine current policies related to permitting and timber salvage are welcome first steps toward responsibly increasing domestic production. Trump鈥檚 executive order directing the Commerce Department to investigate national security concerns related to lumber imports could also help identify obstacles that have limited sawmill production to date.
NAHB looks forward to working with all interested stakeholders to increase the amount of harvestable timber as part of a responsible and more efficient U.S. forestry policy. However, as the U.S. seeks to reduce its reliance of imported lumber and increase domestic production, U.S. sawmill capacity also needs to rise to produce harvested lumber needed to build, remodel and repair homes and apartments.
What is NAHB Doing?
NAHB urged the president to reconsider his March 4 directive to impose tariffs on Canadian, Mexican and Chinese goods, given the long lead time and significant production capacity needed to create additional domestic supply. While the White House decision to institute a one-month delay on USMCA-compliant goods and services from Mexico and Canada is a positive development, even the threat of tariffs creates an uncertain business climate.
For years, NAHB has been leading the fight against tariffs because of their detrimental effect on housing affordability. In effect, the tariffs act as a tax on American builders, home buyers and consumers. NAHB has taken several recent actions to roll back tariffs and to boost domestic production of softwood lumber:
- On March 5, NAHB Chairman Buddy Hughes met with senior staff for U.S. Trade Representative Jamieson Greer to discuss how tariffs on building materials will drive up the cost to construct homes and harm housing affordability and continued to engage with the administration to ensure Canadian lumber was included in the March 6 pause on tariff increases
- The day before,聽聽while testifying before the House Financial Services Subcommittee on Housing and Insurance regarding the need to increase America鈥檚 housing supply.
- NAHB Chief Advocacy Officer Ken Wingert and Senior Federal Legislative Director Alex Strong met with Quebec Premier Francois Legault and other top Canadian officials on Feb. 11 in Washington. Wingert told Legault the U.S. needs Canadian lumber and that NAHB supports Canadian efforts to reach a new trade agreement between the two nations that is fair, equitable and would eliminate tariffs.
- NAHB sent a聽聽on Jan. 31 urging the president to exempt critical building materials from his proposed 25% tariffs on Canadian and Mexican goods.
- With NAHB鈥檚 strong backing, the House in late January passed the聽, legislation that would contribute to better forest management practices, help strengthen the nation鈥檚 housing supply chain and promote affordable housing opportunities for all Americans.
- NAHB has been actively getting our message out to the media on the issue of tariffs. NAHB CEO Jim Tobin has been interviewed by several broadcast outlets including CBS News, CNN, Fox Business Network and Yahoo Finance TV. NAHB spokespeople have also been quoted in The Wall Street Journal, CNN, The New York Times, CNBC, Barron鈥檚, Bloomberg, The Washington Post, Associated Press, Business Insider and other notable news organizations.
Moving forward, NAHB will continue working with all relevant stakeholders to roll back tariffs on building materials, boost sawmill production and increase the domestic supply of timber from federally owned lands in an environmentally responsible manner to help fix building material supply chains and ease costs.
