West Coast Talks About Tariffs, Recession Potential And Buyer Hesitation
At the time of this writing, the new U.S. administration just rescinded a 25 percent tariff that would have made shipments of Canadian lumber to the U.S. 39.5 percent more expensive. While it is good news that the anti-dumping/CVD remains at 14.54 percent, higher rates are expected at some point in 2025. West Coast producers on both sides of the border have a lot on their plates and the lack of clarity out of Washington is another wrinkle making planning and ordering difficult to address. The following is what a few manufacturers had to say about these topics.
Dean Garofano of Delta Forestry Group in Pitt Meadows, BC, said, “Buyers overall have been a little hesitant and on the cautious side during Q1 with inclement weather, all the on-and-off tariff talks and the impacts on the stock markets. Despite these concerns, Delta has managed to achieve some solid sales figures through April. For now, lumber is exempt from any tariffs and the weather is improving so we expect our sales going forward to continue to be solid. We are, however, aware that the Trump administration could announce lumber tariffs at any time and markets and consumer sentiment is shaky at best.”
“There is once again a lot of talk about a possible recession, so there certainly are some possible headwinds to be concerned about,” Garofano continued. “As we sit here in mid-spring, customers are still waiting to see what the takeaway looks like before committing too much on forward orders. Meanwhile, in coastal BC, the log supply is still very tight, especially Cedar. This has led to log price escalation, despite the risk associated with the possibility of lumber tariffs being announced any given week.”
“The recent announcement of the AR6 preliminary review completion only adds to the concerns after coming out at 34.45 percent,” Garofano noted. “The final determination is expected in September or October of this year, when the new rates will become effective at or close to this preliminary rate. Once implemented, the impact of the new duty will remain to be seen, but I suspect we will see some decent activity through August, followed by a wait and see approach this fall as the market adjusts.” Garofano finished his review of the market by stating, “These are very interesting times of great uncertainty with tariffs and on the other hand great concerning certainty with future duty rates. Our approach here at Delta is to prepare as best as we can for what we do know and focus on the things within our control.”
Gurinder Grewal with Partap Forest Products commented that despite the positivity he has been hearing from customers, the market is “tricky due to the current situation the industry is in.”
Regarding supply and demand, Darren Duchi of Siskiyou Forest Products in Anderson, CA, said that they are “oversupplied and under demand on most products. Our customers are a little weary to a certain degree, but it hasn’t been a fantastic market for some time. That said, we feel like there is a massive opportunity for the domestic supply chain. Many U.S. consumers have gotten so used to not searching for domestic products, that bringing that demand back on shore, whether it is replacing plastic products from overseas, or any inferior composite, is a great opportunity for us.”
At the time of this writing, Duchi added, “I think a lot of this will be decided in the next 40 to 60 days. We are being honest with our customers and letting them know they need to come up with a plan. These customers are used to getting certain products at a certain price point and their choices are going to be whittled down but when there is disruption, there is opportunity. It may not feel like it now, but we feel that the more consistent consumption of domestic products is coming.”
Duchi added, “A couple of years ago, our biggest challenge was people and labor, but now it is pulling through and demand. We hit a tipping point with imports flooding the market, which makes us focus on slowing consumption.”
Gurinder Grewal of Partap Forest Products in Maple Ridge, BC, said that it’s “pretty consistent with supply and demand. Obviously, some items move a lot quicker than others and at times low grade is left behind which isn’t a huge concern, but it would be nice if some of that could ship across the line. Price is also consistent as of right now. So far, we’ve been getting some positive vibes and feedback from our custom ers but it’s tricky due to the current situation this industry is in. The Cedar and Hemlock log availability is very tight, but Cedar has always been tougher to get. We’ve noticed some change in Hemlock logs as well. The price increases for logs are being felt.”
“In regard to the tariff implementation, I do not feel it is good for business without getting too much into the weeds.”
