The Trump administration's USMCA decision triggers annual reviews, raising fresh alarms over Canadian building material costs for US brokers
The Trump administration's decision to forgo renewal of the United States-Mexico-Canada Agreement (USMCA) on the July 1 deadline has opened a new front in the ongoing trade war — and one with direct consequences for US homebuilders and the mortgage professionals who serve them.
US Trade Representative Jamieson Greer confirmed on Wednesday that the three countries met virtually for the required joint review and that the US declined to extend the agreement in its current form.
The USMCA remains in effect until 2036 but will now be subject to annual reviews that could force significant renegotiation of major sections of the treaty, a development that has rattled an already strained construction supply chain.
Canadian softwood lumber, which accounts for approximately 25% of total US supply, already carries a combined duty burden of 45% following a series of escalating tariff actions in 2025 and early 2026.
That cost has steadily compressed builder margins even as new home demand remains sluggish and housing starts have declined every year since their 2021 peak.
Canadian lumber already carrying a heavy load
Russ Taylor, president of Russ Taylor Global and one of North America's foremost lumber market analysts, previously told Mortgage Professional America that a USMCA lumber deal was unlikely to emerge in time.
"The federal government of Canada will be approaching the US government about some sort of a package trying to deal with steel, aluminum, auto parts, and lumber, because they're being heavily penalized right now," Taylor said.
"But I don't think they can somehow pull off all of that in less than two months, because governments don't work that fast."
Taylor also pointed to the structural incentive US domestic lumber producers have to resist any deal that disrupts the current tariff advantage.
"Lumber has always been, for the last 45 years, sort of hung out on its own," he said.
"And the US industry is probably saying, 'We like the way the tariffs and the duties work right now. We don't want to change it because it gives us a competitive advantage.'"
The Canadian Chamber of Commerce has estimated that combined US tariffs on Canadian goods, including lumber, steel, and aluminum, could add as much as $14,000 to the cost of building a US home by 2027 if current duties remain in place.
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What brokers should watch
For mortgage originators, the USMCA stalemate is another complicating variable in an already difficult market. Tariffs put new home construction under pressure as higher input costs suppress building activity, tighter inventory keeps prices elevated, and qualified borrowers can't find homes they can actually buy.
Taylor, who has tracked North American lumber markets for decades, described the current environment in stark terms.
"There's just so much uncertainty that the market's been stalled," he said. "It's kind of like there's quicksand all around you, and you've got to be careful you don't step in it, because it's all there."
Read more: Lumber dispute sparks new fears of homebuilding price spike
The US and Canada have not yet started bilateral trade negotiations of their own — in contrast to the US and Mexico, which are scheduled for a third round of USMCA-related talks during the week of July 20.
That lag suggests Canadian lumber's tariff situation is unlikely to be resolved before 2027 at the earliest, extending a cost environment that is already suppressing new home construction and constraining the inventory pipeline that brokers depend on.
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