Market Report: Wood Products Market Shaped by Tariffs, Wildfire, and Mass Timber Demand

Plywood

Plywood markets have improved noticeably over the last several weeks. We sold significant volumes above our production capacity during the last two weeks, and those sales occurred at escalating prices. FEA reported a 4% week-over-week increase for 1/2-inch 4-ply, which is consistent with what we are seeing in the market.

More importantly, prices are up approximately 36% year over year. That improvement helps offset many of the cost increases we have absorbed over the past year, particularly in fuel and resin. The recent move does not eliminate margin pressure, but it improves the near-term outlook and confirms that buyers are beginning to respond to tighter supply and higher replacement costs.

Veneer

Veneer continues to improve, although the gains remain modest. Green veneer volumes are moving at a decent rate, but pricing has not appreciated enough relative to log costs to make veneer attractive on a standalone basis.

LVL-grade veneer sold to the outside market is also improving, but only slightly. The LVL market now sets the tone for veneer pricing, so the short-term priority is to see sustained improvement in LVL demand. Without a stronger LVL market, veneer pricing will likely remain exposed to high log costs and limited margin recovery.

Mass Timber

Our Mass Timber facility has the best order file since the plant was first put into operation. Standout project types include point-supported slab, multi-story multifamily buildings, warehouses, and data center spaces.

Every completed project continues to reinforce the speed advantages of prefabricated mass timber construction. The cost premium historically associated with timber versus other building materials continues to narrow, and we are now competitive on more projects. We are also hearing that pre-engineered metal building costs have increased roughly 25%, with lead times extending by another 25%. In addition, steel quotes are often held for only one week, or are requoted during the project timeline, leaving owners with limited protection against cost escalation.

Domestically supplied timber warehouses offer higher-quality construction, greater price stability, and an aesthetic advantage over metal buildings. Industrial buildings, warehouses, and data centers are becoming standout applications for mass timber, and the market is increasingly receptive to timber as a practical, cost-stable, and durable alternative.

Canadian Tariffs and Trade Policy

The most significant market disruptor this month is the proposed 50% additional tariff on a wide range of Canadian goods under Section 338 of the Tariff Act of 1930. The proclamations were signed on July 20, 2026, and are scheduled to apply to goods entered for consumption, or withdrawn from warehouse for consumption on August 19, 2026.

We support the inclusion of veneer, plywood, LVL, and related derivative softwood products in the proposed tariffs.

Previous tariffs have focused primarily on softwood lumber, while many other timber derivative products continue to enter the U.S. without the same protections. This has left U.S. manufacturers competing against Canadian producers that benefit from significant built-in cost advantages, including a weak Canadian dollar, government-subsidized timber, direct monetary subsidies, and other forms of government support that allow Canadian products to flow into the U.S. at prices that would be unsustainable to domestic producers.

The need for a level playing field becomes even more critical when wood products markets are weak. In strong markets, tariffs may have less visible effect; in recessionary markets, they can be decisive in preventing subsidized imports from setting the clearing price below sustainable domestic production costs.

The proposed tariffs reach far beyond the highly publicized disputes over dairy, alcohol, and motor vehicles. Current published summaries identify an estimated C$28 billion of trade exposure across 554 tariff lines, with affected categories extending into minerals, chemicals, wood products, textiles, food ingredients, electronics, furniture, sporting goods, and other manufactured products. For the wood products industry, value-added items such as plywood, MDF, particleboard, moldings, doors, wood furniture, and related products could be affected.

First, Canadian producers benefit from a significant currency advantage.

The Canadian dollar has remained materially weaker than the U.S. dollar. An exchange rate near C$1.40 per U.S.$1 gives Canadian exporters a substantial pricing advantage: they produce their products using Canadian dollars but sell them into the U.S. market in stronger U.S. dollars. The Canadian dollar was at parity with the US dollar 13 years ago, but has consistently weakened since.

Second, Canadian producers operate under a fundamentally different timber-pricing system.

In the U.S., public timber is generally sold through a competitive bidding process, meaning manufacturers must compete for available timber at market prices. In Canada, much of the timber supply comes from government-owned Crown lands under a provincial stumpage system that does not operate like the U.S. competitive market. This gives Canadian producers a significant raw-material cost advantage.

Third, British Columbia has provided additional relief on those timber costs.

In February 2026, the province announced a stumpage deferral program that the U.S. Lumber Coalition estimated would provide approximately US$124 million to US$242 million in liquidity to British Columbia mills over 11 months. Stumpage is the price paid for the timber itself and is a major component of the total delivered cost of a log. Because log costs are our single largest expense, government assistance with stumpage can significantly affect a producer’s ability to compete on price.

Finally, Canada is investing heavily in helping its wood products industry expand into the same value-added markets served by U.S. manufacturers.

Canada has announced roughly $2.1 billion in direct subsidies and investment support aimed at helping producers retool and expand into engineered wood products. That matters directly to U.S. veneer, plywood, LVL, and mass timber producers because these are precisely the markets where value-added competition is increasingly concentrated.

Rural Pacific Northwest communities have already felt the consequences of Canadian veneer and derivative wood imports over the last decade, including mill closures and loss of family-wage jobs. Strong and enforceable trade remedies are therefore important not as a permanent substitute for competitiveness, but as a correction against structural advantages created by government policy.

Tariffs work.

The U.S. recently announced 25% Section 301 tariffs on Brazilian wood products imports due to illegal deforestation and its effect on US competitiveness. We have seen immediate and substantial inquiries from domestic manufacturers of cabinets, furniture, window and door parts, and even commodity panels who have sourced material from foreign countries but are once again looking at local supply.

The tariff discussion, and the goal of onshoring American manufacturing is having the desired effect of encouraging domestic production again. We would much rather see the success of American workers be the priority again, instead of the cheapest material from the cheapest foreign port.

Pacific Northwest Wildfire Status

The 2026 Pacific Northwest wildfire season has intensified into one of the most severe on record and now represents a significant risk to air quality, public safety, critical infrastructure, and regional economic activity.

Oregon has already surpassed its previous statewide record for acres burned. As of early August, nearly 2 million acres had burned across the state, exceeding the previous record set during the 2024 fire season, with approximately two months remaining in the traditional wildfire season.

Among the largest incidents, the Rowe Creek Complex in central Oregon had grown to more than 320,000 acres and was reported at 53% containment on August 3. Additional large incidents highlighted in Northwest Coordination Center reports include the Grasshopper, Big Grass, Bench, Fox, Coleman Creek, Second Flat, Shingle, and Bald Mountain fires, along with several other major complexes across central and eastern Oregon.

Collectively, these fires demonstrate the scale of fuel accumulations across many landscapes and the vulnerability of forests, watersheds, and rural communities to prolonged drought and extreme fire weather. Washington is also experiencing substantial wildfire impacts. Major fires in Spokane and Stevens counties have resulted in thousands of evacuations, the loss of hundreds of structures, and a statewide emergency declaration.

Extreme fire behavior has been fueled by prolonged hot and dry conditions across the Pacific Northwest. ASA reported that wildfires have been widespread across Oregon, Washington, and British Columbia since mid-July, driven by abnormally dry weather and moderate-to-extreme drought conditions across nearly the entire region. Satellite imagery and atmospheric modeling have also documented extensive smoke transport, with wildfire smoke affecting communities far beyond the immediate fire perimeters and contributing to poor air quality across large portions of the western United States.

The operational takeaway is straightforward: this is no longer simply a seasonal fire issue. It is a community, infrastructure, watershed, and forest-health challenge with long-term economic consequences. Large fire events threaten homes, transportation corridors, utility infrastructure, municipal watersheds, recreation assets, and timber resources that support rural economies throughout the Pacific Northwest.

The severity of the 2026 fire season also reinforces the importance of proactive forest management. Strategic thinning, hazardous fuel reduction, prescribed burning, roadside fuel treatments, and the creation of fuel breaks can reduce fire intensity, improve firefighter access and effectiveness, protect critical infrastructure, and increase the likelihood that forests survive fire events rather than experiencing complete stand replacement.

Active forest management can also improve watershed protection, support wildlife habitat diversity, reduce future suppression costs, and enhance long-term carbon storage by maintaining healthy, productive forests. While no treatment can eliminate wildfire risk under extreme weather conditions, well-managed forests are generally more resilient to drought, insects, disease, and catastrophic wildfire, resulting in better outcomes for communities, firefighters, and forest ecosystems alike.

These fires are unprecedented in size and potential impact. Our timber resources historically represented a $1 billion annual asset to the state when active forest management was more common across the federal landscape. Today, firefighting efforts cost roughly $500 million annually, not including the health and wellness costs associated with poor air quality. Instead of healthy, rejuvenating stands, mortality has exceeded growth in our federal forests. Doing nothing has not yielded good outcomes. It is time to become stewards of our forests again by thinning overgrown stands, providing access and fire breaks to assist firefighters, and returning forests to historical tree-density levels.

As the 2026 season continues, the need for sustained investment in forest stewardship, fuels management, infrastructure protection, and community preparedness has become increasingly evident. The goal is not to eliminate wildfire, which is a natural part of forest ecosystems, but to reduce the frequency and severity of catastrophic events that threaten lives, property, natural resources, and the economic vitality of rural communities across Oregon and Washington.