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36 Pallet C e nt ral • Janu a r y - Fe b r u a r y 2 0 26 INDUSTRY INSIGHTS F ollowing an extended period of uncertainty over US–Canada trade policy, new tariffs on Canadian softwood lumber are expected to increase costs for US buyers by approximately 45%, according to the National Association of Home Builders. e combined impact of anti-dumping and countervailing duties, along with an additional tariff on wood products, adds complexity to an already challenged market. While these tariffs represent just one factor influencing today's lumber landscape, they are prompting sawmills and downstream manufacturers to reassess strategies, strengthen planning, and explore new ways to remain competitive in the years ahead. As economists debate the effectiveness of trade wars, businesses that depend on lumber are left to fend for themselves if they want to survive. In anticipation of the 45% tariffs, many US-based operations placed large orders with Canadian suppliers, leading to an oversupply across the board. Oversupply and inventory challenges aren't just impacting softwood markets; the hardwood market, which relied on exports to China over the last 5–7 years, is facing its own challenges. Domestically, manufacturers, distributors, and lumber- dependent businesses are chalking 2025 up to "yet another rough year" and hoping for a better 2026. Optimism alone can't offset sawmill closures, inventory oversupplies, a soft housing market, and ongoing labor challenges, but it can shape how the industry responds. To understand the path forward, it's worth taking a closer look at how businesses are adapting and positioning themselves to navigate the days ahead. From investing in automation and cutting-edge tools to diversifying customer relationships, manufacturers are doing everything they can to carry their businesses through. Will it be enough? Only time will tell. Housing Market Lull Spills Over When investors want to understand what's happening in the lumber market in the US, they turn to one key source for clues: the housing market. Research shows that new single-family homes use upwards of 2,200 square feet of softwood plywood and more than 15,000 board feet of framing lumber. is underscores just how intertwined lumber prices are with housing market dynamics. In 2025, the US housing market was slow. With high listing prices and mortgage rates sitting somewhere between 6% and 7%, many buyers abandoned their HOW BUSINESSES CAN FIND SUCCESS IN TODAY'S LUMBER LANDSCAPE BY MARK BARFORD LUMBER PRICES, INVENTORY CHALLENGES, AND INNOVATION

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