President Trump Signs Executive Order to Expand Lumber Production—But Will It Keep Costs Down?

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In This Article

If real estate investors and developers were worried about the cost of lumber in the wake of Trump’s tariffs, the president has now presented his solution: He plans to increase American logging, ramp up timber production, and saw through 280 million acres of national forests and other public lands in the process.

Clearly, this is a divisive issue, angering environmental groups who fear increased logging would be devastating to American forests and wildlife, causing air and water pollution and increasing global warming.

“Trump’s order will unleash the chainsaws and bulldozers on our federal forests,” Randi Spivak, public lands policy director for the Center for Biological Diversity, an environmental group, said. “Clear-cutting these beautiful places will increase fire risk, drive species to extinction, pollute our rivers and streams, and destroy world-class recreation sites.”

A 25% Tax on Canadian Exports to the U.S.

According to the U.S. International Trade Commission, Canada is America’s prime lumber supplier. In 2021, 46% of America’s forest products were imported from Canada and more than 13% from China—two countries now in the crosshairs of Trump’s tariffs. Canada faces 25% tariffs on all products it exports to the U.S. The U.S. also exports $10 billion worth of forest products to Canada yearly, which will face retaliatory tariffs.

In addition to increasing logging, a White House directive described “onerous” federal policies that have prevented the U.S. from developing a timber supply that would allow it to be self-sufficient. The result, it says, has been increased housing and construction costs and a national security threat.

Overriding the Endangered Species Act

The president has called for a meeting of high-level officials to override the landmark Endangered Species Act, allowing development even if it results in extinction. The committee is usually only convened in the face of natural disasters such as hurricanes and wildfires, and even then, it is rarely so.

However, many developers have welcomed the president’s directive, hoping that it will reduce their overall costs. Peter Navarro, the White House senior counselor for trade and manufacturing, told reporters:

“Our disastrous timber and lumber policies—a legacy of the previous administration—trigger wildfires and degrade our fish and wildlife habitat…They drive up construction and housing costs and impoverish America through large trade deficits that result from exporters like Canada, Germany, and Brazil dumping lumber into our markets at the expense of both our economic prosperity and national security.”

The Terror of Tariffs

The real estate industry fears tariffs could be devastating for home prices in the U.S. due to its dependence on Canadian lumber. During the COVID-19 lockdown, the supply chain slowdown and the shutdown of lumber mills sent lumber prices soaring amid rampant inflation, dramatically increasing construction costs and home prices.

In addition, the government has imposed 25% tariffs on steel and aluminum (commercial construction uses metal studs, not wood), which could affect plumbing costs, as well as the price of appliances, vehicles, and more.

Tariff-induced increases couldn’t come at a worse time. Sales of existing homes fell 4.9% in January—the 19th consecutive month that prices increased, the National Association of Realtors reported on Friday.

According to research firm Pantheon Macroeconomics, prices paid for steel and aluminum could rise as much as 20% in the months after tariffs are implemented before declining.

“The president ran on bringing down the cost of housing,” said Ken Wingert, chief advocacy officer at the National Association of Home Builders. “Increasing the cost of construction inputs doesn’t accomplish that goal, and we will continue to relay that to folks in the administration and on the Hill.”

Expensive Housing and HUD Layoffs Could Continue to Put Homeownership Out of Reach

There was already a 14.5% duty rate on Canadian lumber, which doubled last year, meaning the 25% tariff will mean a 40% lumber tariff. This, coupled with the reduction of HUD staff, could make finding affordable housing even more difficult.

Trump allies paint a different picture, envisioning the housing industry thriving under the new president.

“The deregulation and the tax cuts are really pro-housing, and the Trump HUD team has all sorts of initiatives to promote homebuilding and homeownership,” Steve Moore, a senior visiting fellow at the Heritage Foundation and longtime Trump economic advisor, told Politico. “Trump is going to be very positive for housing, and he’s going to make it so there’s more affordable housing.”

$10,000 More Per House Possible

Rob Dietz, chief economist at the National Association of Home Builders (NAHB), told CNBC that the new tariffs could increase builder costs anywhere from $7,500 to $10,000 per home, citing estimates from U.S. homebuilders. Last year, the NAHB estimated that every $1,000 increase in the median price of a new home means 106,000 potential buyers are priced out.

Lumber costs specifically are expected to increase the average cost of a home by $4,900, according to Leading Builders of America, a trade group representing most of the nation’s publicly traded homebuilders.

Paul Jannke, principal at Forest Economic Advisors, told CNBC:

“Since Trump first imposed the tariffs on Feb. 1, which were then delayed, we’ve seen some increase in buying, with prices for Western Spruce-Pine-Fir two-by-fours increasing 13%. With the reimposition of the 25% tariff on Canadian goods shipped to the U.S., we expect Canadian producers will stop shipping lumber to the U.S. Meanwhile, dealers who have been hesitant to buy, given uncertainty around the tariffs, will need to step up purchases ahead of the coming building season. This will drive prices higher.”

Cautious Optimism From the Construction Industry

The construction industry was cautiously optimistic about Trump’s order to increase lumber production to offset the price increase engendered by tariffs.

“The domestic lumber industry cannot meet current demand, so we applaud President Trump for exploring opportunities to increase domestic supply as a long-term solution,” wrote Ken Gear, CEO of the Leading Builders of America (LBA), in a statement.

The NAHB, which represents small-to-midsized private builders, welcomed the increased lumber production in a statement to CNBC but sounded a note of caution, saying: “Any additional tariffs on lumber could further increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices.”

Final Thoughts

In the age of artificial intelligence (AI), house printing, and advanced construction and engineering techniques, it seems bizarre that the residential homebuilding industry still relies on construction techniques invented thousands of years ago. Chopping down trees to make wooden beams and studs seems old-fashioned and costly.

Also, it’s not as simple as invoking a presidential order and miraculously having reasonably priced home-grown wood appear. Jannke estimates it would take up to three years to build multiple new mills. He explained to CNBC that there are a limited number of companies that manufacture sawmill machinery and even fewer that can build a mill.

Kyle Little, chief operating officer of Melville, New York-based Sherwood Lumber, agreed, telling CNBC: “It won’t be a flip of a switch. You’re taking a 40-year supply chain and trying to switch overnight—that’s hard.”

While the tariffs are implemented and national forests are threatened, researching and increasing the production of affordable alternatives to wood should be a priority. It makes sense not only from a tariff/cost point of view but also from a safety perspective. After the L.A. wildfires, it’s evident lumber is a liability.

Vinyl plank flooring, concrete board siding, and composite decking have proven to be great-looking and durable wood alternatives do exist. In the same way that PEX has replaced copper in plumbing, an alternative to wooden studs and beams needs to be a priority. The good news is that the products are already available. It’s time for mainstream construction to make a change.

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