Fresh US tariffs on Canadian wood products could further squeeze home affordability
A new round of United States tariffs on Canadian softwood lumber and finished wood products took effect Tuesday, adding to the mounting pressures facing Canada’s housing and mortgage sectors.
The measures, signed into law by President Trump last month, impose a 10% tariff on all imported softwood lumber and timber, and a 25% tariff on kitchen cabinets, vanities, and certain upholstered furniture. These are set to climb even higher in the new year.
The move comes as Canadian producers are already contending with a combined 35.16% in US countervailing and anti-dumping duties, pushing the total import tax on Canadian softwood lumber above 45%.
The British Columbia Lumber Trade Council called them “misguided and unnecessary,” while the Canadian Forest Product Sector said the move “is unjustified and disregards decades of evidence and cooperation that confirm Canadian forest products strengthen, rather than threaten, US national security.”
For Canadian mortgage professionals, higher material costs could translate into elevated home prices and renovation expenses, potentially slowing new construction and dampening demand.
Canada’s homebuilding crisis may already be even worse than it seems, Canadian Home Builders’ Association (CHBA) chief executive officer Kevin Lee told Canadian Mortgage Professional, with housing starts essentially skewed by construction of purpose-built rental accommodation.
Meanwhile, the Bank of Canada has highlighted exports as a key indicator for future rate decisions, following its rate cut in September. The 3% drop in export volumes in August is unlikely to reassure policymakers.
If exports are weak and the trade deficit is growing, it’s a sign that the economy may need support. This increases the chances that the BoC will cut rates or keep them low to stimulate growth and help exporters by making the Canadian dollar cheaper.
The tariffs are part of a broader pattern of protectionist trade policy from the Trump administration, which has previously targeted steel, aluminum, and vehicle components.
With tariffs on Canadian wood products ratcheting up, mortgage professionals should brace for higher costs, slower construction, and increased uncertainty in the housing market.
According to the Canadian Chamber of Commerce, tariffs on foreign construction materials have already added up to US$6,000 to the cost of building a single-family home in the United States since 2018. If current measures remain, the cost could rise by another US$14,000 by 2027.
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