Here’s what Americans need to know.
President Donald Trump’s tariffs have sparked a significant increase in lumber prices, with concerns mounting about their impact on housing affordability in the United States. Homebuilders are now warning that the escalating costs of lumber, driven by these tariffs, could result in higher construction expenses, ultimately making housing more expensive for American consumers.
Lumber prices reached their highest point in two and a half years this week, and futures are up more than 14% so far in 2025. This increase follows the president’s executive order launching a national security investigation into the potential vulnerabilities in the U.S. wood supply chain, particularly concerning imported timber, lumber, and related products. The investigation could lead to even higher anti-dumping tariffs on Canadian lumber, which could further escalate the price of housing.
Currently, the U.S. imposes a 14.5% anti-dumping and anti-subsidy tariff on Canadian softwood lumber, along with a 25% tariff on Canadian imports, including lumber, which took effect recently. This has pushed the total tariff on Canadian lumber imports to nearly 40%. Canada is by far the largest source of lumber for the U.S., and these rising tariffs are raising alarms among homebuilders, who fear that higher material costs will squeeze housing affordability even further.
The National Association of Home Builders (NAHB) has highlighted the issue, noting that the U.S. imported around $8.5 billion in wood products in 2023, with nearly 70% coming from Canada. NAHB Chairman Carl Harris criticized the new tariffs, stating, “Raising tariffs on Canadian goods will increase construction costs and ultimately lead to higher prices for consumers.” Harris emphasized that President Trump’s goal of making housing more affordable could be undermined by these tariffs, which discourage new development.
The Federal Reserve’s recent Beige Book report also pointed to growing concerns among builders and lenders about the rising costs of lumber and other materials due to trade policies. Four of the Fed’s regional districts, including Richmond, St. Louis, Kansas City, and San Francisco, noted that the construction industry is already feeling the pinch, with some builders negotiating price escalation clauses to protect themselves from anticipated cost hikes. The report also indicated that lenders are adjusting their underwriting processes to account for the growing risks tied to higher building material prices.
As the housing market faces new challenges, it’s clear that the administration’s tariffs are having unintended consequences that threaten to hinder economic growth and affordability for middle-class Americans. It’s time for policymakers to reassess these trade barriers and consider alternative approaches to reducing construction costs and boosting housing supply.