On August 25th President Donald Trump suggested that imports of wood products may pose a “national security threat” — a remark presumably made after the release to the administration of the Section 232 investigation report into forest products ordered by Trump in March.
The Section 232 investigation into forest products aligns with Trump’s overall approach to trade as Canada’s exports of goods to the United States in 2024 tallied $411.9 billion to merchandise imports of $349.9 billion resulting in a $62 billion merchandise deficit. [Although this “tremendous deficit” ignores a sizeable US “trade services” surplus and the fact that forest products are far from the largest Canadian export to the US.]
Nevertheless, forest products represent one of the most visible of the trade commodities imported from Canada, particularly softwoods, to the administration — as President Trump emphasized at the World Economic Forum in January livestream address “…we [US] don’t need their [Canada] lumber because we have our own forests…”
In 2024 the US imported around $11.1 billion in forest products from Canada with China at $2.11 billion in forest product exports, a distant second. And Canadian softwood imports have attracted the most attention as they are closely tied to the US construction and homebuilder sectors.
According to the analysis by the commodity research company Fastmarkets, Canadian softwood imports in 2024 to the US accounted for 12 BBF (billion board feet) or a 24.1% share of the estimated 49.80 BBF US consumption. Besides softwood lumber, Canadian imports of OBS (Oriented Strand Board better known) as engineered wood panel in 2024 were 6.20 BSF (Billion Square Feet) or a 28.9% share of the US consumption of 21.50 BBF.
With Canada having such a heavy market share, it isn’t surprising that there have been calls for more diversification in lumber imports by US home builders and lumber producers.
Section 232: The Catch All
The investigations fall under “Section 232” of the Trade Expansion Act of 1962. Following the filing of a petition [which can be initiated through a number of official channels including industry groups] the Secretary of Commerce then investigates to determine if the imports are a threat to national security. The Secretary then has 270 days to present the findings in a report to the President with recommendations for action.
But Section 232 is something of a catch all in the Commerce Department’s regulatory toolkit, as the definition of exactly what constitutes a “national security threat” is often in the eye of the beholder. And for those companies and nations exporting to the US, Section 232 investigations often appear to be more a tool to circumvent the rule-based trading conventions of global commerce than a regulatory avenue to deal with threats to national security.
The Section 232 investigation into forest products was just one of a host of Section 232 investigations that Trump ordered back in March which included key products such as autos, steel, aluminum, and copper — all of which are key Canadian exports to the US. So, it is understandable why Canada perceives these Section 232 investigations as a direct threat to their export trade with the US. After all, when the copper inquiry was concluded in July, a 50% tariff on imported copper was immediately levied by the Trump administration in what could be interpreted as a prelude to the results from the forest product investigation.
Forest from the Fees
But the lumber imports to the US from Canada, especially softwood from British Columbia (BC), have been a sore spot in the US-Canadian relations for decades. And this new iteration of the long-standing dispute stands to add a layer of complexity to the existing situation.
Back in 2006 the Canada-United States Softwood Lumber Agreement (SLA) was implemented and managed softwood lumber trade between the US and Canada for nine years. The SLA pact expired in October 2015 and since May 2017, Canadian softwood lumber exports to the US have been subject to countervailing and anti-dumping duties.
Subsequently, Canada has successfully challenged these US duties under the dispute resolution provisions of the World Trade Organization (WTO), the North American Free Trade Agreement (NAFTA), and succeeding the United States-Mexico Canada (USMCA) trade agreement.
But Canada’s success in international forums hasn’t deterred the US. The US government (both Republican and Democratic administrations) along with domestic wood producers — the US Lumber Coalition — have long argued that in Canada, provinces (especially BC) set timber fees for wood harvested from Crown land, which gives them an unfair pricing advantage over the US competitors, which “distorts” the US lumber market.
In response to the “distorted” pricing for softwood lumber import from Canada under the 5th Annual Administrative Review (AR5) were fixed at 27.30% combined antidumping duty and countervailing duty. This year on August 12th, the US Department of Commerce (DOC) published the new countervailing duties for the sixth administrative review (AR6) of imports of Canadian softwood lumber products in the Federal Register at a combined 35.19% (20.56% antidumping duty and 14.63% countervailing duty).
With the Section 232 investigation in forest products concluded (although at this writing, no official confirmation of the conclusion of investigation has been verified by the administration) the possibility of a significant increase in tariffs on Canadian forest products seems probable. (see Julie Gedeon stories on page 36)
Demand: Home Sweet Home Sales
Demand for forest products is largely influenced by construction, especially single-family homes. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market index (HMI), builder confidence in the market for newly built single-family homes was 32 in August, down one point from July, reflecting the general weakness in the housing market. The NHAB cites high mortgage rates, weak buyer interest and high prices and material shortages as the main reasons for the HMI’s low level. With the August report, the HMI has now been posted negative for 16 consecutive months ranging relatively low between 32 and 34 since May.
Tariffs are also having an impact. The week-to-week framing lumber composite price was up 1.6% on Aug. 15, 2025. Softwood lumber prices are up 0.9% over the past month and 11.6% higher than they were one year ago.
The Global Wood’s July newsletter echoed the NAHB assessment of the home building sector reporting, “While new home construction rebounded in June, single-family homebuilding dropped to an 11-month low in as high mortgage rates and economic uncertainty hampered home purchases, suggesting residential investment contracted again in the second quarter.” The report added, “The US Department of Commerce also reported that permits for future construction of single-family homes tumbled to more than a two-year low last month, aligning with downbeat sentiment among home builders.”
The increase in building costs has also trickled down into the home remodeling sector. Home Depot Pro’s August report focusing on remodeling cited several trends stressing the market including 6.87% mortgage rate in June, making financing new homes more costly, 9% monthly decline in new home mortgage applications due to the high rates, 12.1% monthly decrease in single-family home sales and 20.8% increase in unsold homes on the market (including homes under contract) compared to 2024.
Trade Complexities Abound
The all-out tariff war initiated by the Trump administration has thrown international trade into chaos and forest products are no exception and retaliation isn’t always in the form of more tariffs. For example, back in March the General Administration of Customs of China (GACC) announced it was banning the imports of US logs. GACC stated that these suspensions were in response to recent detections of forest pests such as bark beetles and longhorn beetles in US shipments. While lumber shipments to China aren’t on the level of soybean exports which hit $12.8 billion — making China the largest importer of US soybeans —nonetheless, China reported in 2024 that imports of US hardwood and softwood logs were $612 million and $237 million respectively.
On August 22nd President Trump announced that the administration would complete a Section 232 investigation into imported furniture within 50 days. The presumed deadline would fall in mid-October. Vietnam and China are the largest furniture exporters to the US at 35% and 26% respectively. Chinese furniture also in many cases faces 25% Section 301 duties along with an antidumping order on wooden furniture. New tariffs from the Section 232 probe would stack additional costs on the furniture imports.
Of course, in July President Trump signed an executive order to impose a 50% tariff on imports from Brazil which also includes wood and wood products which took effect on August 6th. [The 50% tariff was based on a 10% baseline levied in April and the additional 40% in August.] The main forest product exemption to the tariff is imported Brazilian wood pulp.
In the short term, confusion in the forest product sector is likely to continue [for example, EU wood products are also being evaluated in a Section 232 probe] until there is some clarity with the US tariff regime.
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