As of October 17, 2025, the construction industry faces heightened cost uncertainty as newly adjusted lumber tariffs reshape material pricing dynamics. The U.S. Department of Commerce finalized higher anti-dumping (AD) and countervailing (CVD) duties on Canadian softwood lumber in mid-2025, with “all others” now facing a combined rate of about 35.19 % and major producers seeing combined rates up to 47.65 %. In addition, a new 10 % Section 232 tariff on softwood lumber (effective October 14, 2025) now overlays existing duties.
These overlapping layers of tariff pressure introduce more volatility, risk of pass-through, and stress on contract margins and contingency planning. This article outlines how those costs translate into construction economics and how Owner’s Representatives (and development teams) can effectively manage the exposure.
The Current Tariff Landscape
Tariffs on lumber are not new, but the current configuration represents a more aggressive stacking of trade tools.
Revised AD / CVD Duties
• In July 2025, the U.S. Department of Commerce announced its results in the sixth administrative review (AR6) for the anti-dumping order on Canadian softwood lumber. Final AD rates ranged from 9.65 % up to 35.53 %, and for the “non-selected” or “all others” category, the rate moved to 20.56 %.
• For countervailing duties, Commerce’s final AR6 CVD results (published August 2025) showed subsidy rates between 12.12 % and 16.82 %, effectively layering additional duty on top of AD rates.
• That means combined duty rates for some producers now approach 47.65 %, and for the “all others” pool are near 35.19 %.
New 10% Section 232 Tariff
• On September 29, 2025, the President issued a Proclamation under Section 232 imposing a 10 % tariff on imports of softwood timber and lumber, citing national security concerns.
• The Proclamation specifies that these tariffs stack on existing AD/CVD duties; they are not substitutes.
• The Proclamation also imposes tariffs on related wood products (kitchen cabinets, vanities, upholstered wood furniture) at 25%, with escalation scheduled for 2026.
Because many U.S. framing products rely on Canadian imports or components that cross thresholds, this tariff layering has turned what once was a manageable import risk into a higher baseline stress.
Translating Tariffs into Construction Economics
Tariff percentages tell part of the story. The real driver is how they affect delivered cost, bid behavior, and risk allocation.
• Bid queues & volatility tighten: Suppliers and distributors are shrinking price-hold windows. Quotes valid 30 days earlier may now expire in 14–21 days or carry hold clauses. Some may reserve the right to reprice mid-order if duty or input indices move.
• Contingency stress: Projects will need higher materials contingency or tariff-sensitivity buffers. Without them, cost overruns can cascade, affecting framing, sheathing, millwork, and cabinetry, all of which are interconnected.
• Supplier divergence in duty exposure: Because AD/CVD rates are producer-specific, two Canadian mills may face materially different assessed duty burdens. Procurement teams may want to ask for supplier disclosure; a 5–8 % discrepancy between mills can shift competitiveness.
• Downstream ripple effects: Incremental tariffs on cabinets, vanities, and wood furniture (initially 25 %, rising in 2026) will push finish budgets upward.
In sum, tariff math must feed into delivered unit cost forecasting, bid logic, contract structure, and contingency sizing.
Owner’s Representation Strategies for Mitigating Tariff Risk
Given this environment, the role of an Owner’s Representative becomes more strategic. The following approaches are particularly useful:
• Early and Phased Procurement: Lock critical structural wood scopes (framing, sheathing, supply critical path) in earlier windows, ahead of tariff shifts. Release later packages in phases tied to structural milestones so exposure is contained and cash flow optimized.
• Dual-Track Supplier Strategy: Always maintain a domestic-first sourcing path while qualifying import-exposed alternates. That flexibility allows switching if spreads tighten. Where possible, insist in RFQs that suppliers disclose their duty status and cash deposit obligations.
• Contractual Safeguards: Embed protective language into construction documents:
o Escalation provisions keyed to public indices or custom duty triggers, with thresholds, sharing formulas, and reconciliation windows.
o Material allowances + reconciliation (e.g. 30–45 days) so suppliers or subs can update pricing closer to delivery.
o Change-in-Law clauses that explicitly treat tariff shifts (AD, CVD, Section 232 or similar) as cost-adjustable events, not force majeure, thereby preserving schedule and cost transparency.
• Design Flexibility and Quantity Optimization: Small tweaks in structural design can yield board-foot savings without a full redesign:
o Minor adjustments in joist spacing, beam depth, or span layout
o Strategic substitution of engineered products (I-joists / LVLs)
o Panel optimization / factory cutting to reduce waste
Even a 3–7 % reduction in total board footage can provide meaningful buffer against tariff-driven escalations when applied across a large development.
• Logistics, Sequencing, and Staging Controls: Tariff risk is magnified by delays and hidden holding costs. Strategies include:
o Monitoring port congestion, customs delays, and yard lead times
o Using “hold-and-release” yard strategies to avoid site storage costs
o Sequenced deliveries aligned with site capacity
o Shorter lead windows for import-exposed items where possible
• Sensitivity Modeling & Contingency Strategy: Run multiple bid-day and delivery window stress scenarios (±8–12 % lumber cost swings) to test impacts on hard costs, fee, and financing structure. Use those models to justify a lumber-specific materials contingency or hedging approach.
Outlook & Key Watchpoints
Tariff regimes are rarely static; several variables now require ongoing attention.
• Producer-specific AD/CVD rates: Suppliers’ individual assessed margins can diverge, meaning a supplier that appeared competitive at bid time may face reallocation risk later.
• Possible reversal, carve-outs, or litigation: The 10 % Section 232 tariff was imposed via executive action, and trade policy could pivot if challenged, negotiated, or litigated.
• Escalating import pressure in downstream categories: Tariffs on cabinetry, vanities, and other wood goods are set to escalate in 2026; those late-stage packages may drive finish cost risk.
• Market behavior shifts: Reduced Canadian supply may push U.S. mills to expand, increasing domestic cost pressure. Meanwhile, downstream demand may crowd material categories.
• Regulatory or trade agreement changes: Future amendments to USMCA/CUSMA, bilateral negotiations, or court rulings (e.g. via CUSMA Chapter 10 panels) could shift AD/CVD treatments.
As of late 2025, the layering of AD/CVD and Section 232 tariffs has introduced a more volatile and less predictable cost baseline for lumber in U.S. construction. For development and construction stakeholders, mere awareness is no longer enough. The differential between bidders, the structure of procurement, the rigor of contract language, and the size of contingency buffers now each have magnified impact.
Owner’s Representatives play a pivotal role in translating tariff dynamics into procurement logic, protecting cost exposure, and steering projects toward financial resilience. Moran Consultants continues to evaluate evolving trade policy, supplier assessments, and project-level sensitivities so that development teams can move forward grounded in data rather than speculation.