President Donald Trump has made housing affordability a defining commitment of his second term by moving aggressively to build more housing: faster permitting, federal land for development, and sustained pressure on state and local governments to dismantle the zoning restrictions that have throttled supply for a generation. If these efforts succeed — and there is real reason to believe they will — America could see its fastest expansion in homebuilding in decades.
But a significant blind spot remains, and it deserves more attention. For decades, the United States has imposed import tariffs on Canadian softwood lumber, constraining supply, and raising prices, in the U.S. As the Trump housing boom begins, there is a real concern that there may not be enough affordable building materials — particularly lumber — to build.
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Today, elevated softwood lumber costs are a manageable irritant. But as the Trump administration’s deregulatory push begins to hit pay dirt and construction accelerates, demand for lumber will surge directly into a supply bottleneck that a decades-old trade dispute has made worse. A housing boom that clears bureaucratic hurdles only to stall at the lumberyard. It merely relocates the scarcity and leaves prices stubbornly out of reach for the families this agenda is meant to help.
That risk turned concrete this week. On Monday, the administration invoked Section 338 of the Tariff Act of 1930, a Depression-era authority never previously used, to impose 50% tariffs on roughly $20 billion of Canadian goods, citing discriminatory treatment of American autos, dairy, and alcohol. Raw softwood lumber itself was spared, carved out because it already falls under the existing Section 232 tariff regime. Plywood, fiberboard, and other wood-based products central to home construction were not exempted, and will face the new 50% rate when it takes effect on Aug. 19, the same month a final softwood lumber duty determination is due. Housing materials are now facing pressure from two directions instead of one.
The solution is not complicated, and it is already within reach: Use the bilateral trade talks that the USMCA review has set in motion to finally resolve the U.S.-Canada softwood lumber dispute.
The moment to end a 40-year fight with a deal
This dispute has run in one form or another for more than four decades, cycling through five separate rounds of litigation since the 1980s without producing a lasting resolution. Trump tried to resolve this issue during his first term, as his commerce secretary, Wilbur Ross, led the U.S. through several rounds of unsuccessful talks. The USMCA negotiations present an opportunity for the administration to secure this supply chain and negotiate the first successful lumber deal in nearly two decades.
The economic case for closing it out is stronger than it appears. When Ross allowed tariffs to be imposed on Canadian lumber, the goal was to spur domestic investment — and for a time, it worked. U.S. sawmill employment grew by roughly 10% in the years that followed. But that growth has since reversed by more than half and stabilized. Domestic sawmill capacity utilization now sits at just 68%, meaning the industry is operating at roughly two-thirds of its potential output despite years of tariff protection. The investments that were going to be made have been made. Now it is time to shift this policy in favor of building homes and reducing prices.
At the same time, the duties haven’t even reduced America’s reliance on foreign lumber — they’ve just redirected it. As Canadian import volumes have declined, European producers have quietly stepped in, shipping in duty-free and capturing a growing share of the U.S. import market, with none of the investment benefit the tariffs were meant to secure and none of the price relief American homebuyers need.
A negotiated settlement, folded into the USMCA review already underway, would change this calculus immediately. The 2006 Softwood Lumber Agreement resolved a structurally identical standoff, returned nearly $4 billion in frozen deposits to industry participants, and delivered close to a decade of price stability, all without new legislation or a single vote in Congress. Canada has signaled genuine interest in a deal, including export quotas as part of a broader agreement.
DATA CENTERS GENERATE BILLIONS. SO WHY IS YOUR TAX BILL GOING UP?
For Trump, resolving this dispute is a two-for-one win. It would secure concessions that Canada was unwilling to give during his first term, and helps the White House reduce the cost to build a home at exactly the moment the broader housing agenda needs one.
As conservatives, it is imperative that we demonstrate to the American public that our policy agendas materially benefit American workers. Ensuring that lumber does not become the bottleneck that quietly undermines Trump’s desire to build more housing is a decision the administration can make today. With new duties on Canadian building materials set to take effect Aug. 19, the window to strike a deal before costs rise further is closing fast. The USMCA talks remain the fastest path to making it happen.
Robert Ordway is a former senior housing policy adviser in the U.S. Senate.
