U.S. President Donald Trump has ordered a new trade investigation into lumber imports under Section 232 of the Trade Expansion Act, a move that could impose additional tariffs on Canadian softwood lumber and related products. The probe, announced on March 1, 2025, marks Trump’s third tariff-related action in a week and escalates trade tensions with Canada and other key exporters.
Key Details of the Investigation
- Scope: The probe targets lumber and derivative products, including furniture like kitchen cabinets, even if made from U.S.-exported lumber.
- Timeline: The Commerce Department has 270 days to complete its national security review.
- Domestic Boost: Trump also directed agencies to streamline permits for harvesting timber on public lands and improve salvage efforts for fallen trees.
Existing and Potential Tariffs
Canada already faces a 14.5% combined anti-dumping and anti-subsidy duty on softwood lumber. The new investigation could layer additional tariffs on top of this, as well as Trump’s broader threat to impose 25% tariffs on all Canadian and Mexican goods starting March 4 unless border security and fentanyl trafficking concerns are addressed.
| Tariff Type | Rate | Status |
|---|---|---|
| Softwood Lumber Duties | 14.5% | Active since 2017 |
| Proposed Section 232 Tariffs | TBD (likely 25%) | Under investigation |
| Broad Canada/Mexico Tariffs | 25% | Scheduled for March 4, 2025 |
Rationale and Reactions
The White House argues that reliance on imported lumber threatens national security, citing the military’s need for construction materials and economic risks from import dependency. Trade adviser Peter Navarro accused Canada, Germany, and Brazil of “dumping lumber into U.S. markets,” harming American industries.
Canadian officials and U.S. homebuilders have long criticized lumber tariffs, arguing they inflate housing costs. The National Association of Home Builders estimates existing duties add $1,000 to the price of an average new home.
Broader Trade Strategy
This probe follows Trump’s recent actions to revive tariffs on countries with digital services taxes (including Canada, France, and India) and a Section 232 investigation into copper imports. Analysts view these moves as part of a broader strategy to reshore manufacturing and pressure trading partners.
What’s Next for Canada?
- The U.S. remains Canada’s largest lumber export market, with $8.3 billion in sales in 2024.
- Ottawa has repeatedly challenged U.S. duties under USMCA, calling them “unfair,” but a resolution remains elusive.
- Industry groups warn new tariffs could devastate forestry-dependent communities and strain cross-border relations.
As deadlines loom, stakeholders brace for a potential trade war escalation, with Canada likely to retaliate if broader March 4 tariffs take effect.
