Few economists would characterize the past 12 months as a period of economic stability. Forecasting has never been easy. Frequently changing tariff rates, continuing affordability issues, and general market uncertainty have made it especially difficult to predict what the markets will do.
That’s especially true for materials that affect the shed and portable structures industry, such as lumber and steel. However, manufacturers need to understand what these material prices will do in the future, as challenging as that is in the current market.
LUMBER
Case in point—many were thinking that the cumulative tariffs, or duties, of some 45 percent on Canadian lumber would cause exponential increases in lumber costs. Instead, there’s been a steady decline.
“It has everything to do with the residential construction market,” says Anirban Basu, an economist at Sage Policy Group in Baltimore. “High materials prices, high labor costs, and high mortgages have conspired to diminish the demand for lumber because housing starts have plummeted.”
Multifamily housing development starts have also been dampened somewhat by an oversaturated market, particularly in areas that were previously hotspots such as Denver, Nashville, Austin, and Tampa.
Duties on Canadian lumber are nothing new, however. The most recent tariffs are merely the latest in a complex history of tariffs on building materials, going back decades. A 1996 agreement initially placed fees on imports, followed by the 2006 Softwood Lumber Agreement (SLA) permitting Canadian producers to pay export taxes to avoid U.S. anti-dumping duties (imposed on imports priced below their “normal” market value).
And between 2017 and 2024, the U.S. Department of Commerce imposed new fluctuating duties that gradually increased from 8 to 14.5 percent by August 2024. Then, in late 2025, the Trump administration imposed combined duties exceeding 45 percent on Canadian softwood that incorporated existing anti-dumping duties with new 10 percent tariffs.
These apparently will remain in place, since the February 2026 U.S. Supreme Court ruling against certain broad, new U.S. tariffs did not directly lift the duties as they were largely imposed under Section 232 of the Trade Act on national security grounds.
Nevertheless, the most recent tariffs—the highest on record—have not had any noticeable impact on prices to date.
“If you were to graph lumber prices, you would observe the shape of a roller coaster, up through mid-year 2025 and then a significant decline in price later in the year,” Basu says.
So why the weak homebuilding market? Consumers are facing a weaker job market, slower wage growth, and stubbornly high mortgage rates (remaining above 6 percent on a 30-year fixed mortgage after falling from 7 percent at the time of writing). Additionally, shifts in immigration policy have created shortfalls in skilled construction talent, putting further pressure on the cost of delivering new residential units.
“If anything, the nation’s housing affordability crisis has worsened, and it’s difficult for developers and contractors that work with them to create new housing that is affordable to the target audiences,” adds Basu.
On the supply side of the equation, many U.S. lumber producers had stocked up on lumber and increased domestic production, believing they would be needed to substitute for Canadian imports. When that didn’t happen, they were left with a surplus.
“Putting it all together, the price of softwood lumber has declined markedly,” says Basu.
As for 2026-27, Basu forecasts a flattening out of the cost decline as demand will remain “meaningfully suppressed” due to only a slight rise of 2 to3 percent in homebuilding by year’s end.
That’s good news for shed builders, but not for lumber producers. Jesse Wade, director of tax and trade policy analysis at the National Association of Home Builders in Washington, D.C., says the impacts of the duties has also led to an increase in domestic production of lumber—U.S. production has increased from 32 billion board feet (BBF) of lumber to 35 billion over 2017-24 (while Canada has fallen from 27 to 20 BBF). Today, U.S. production makes up about 70 percent of the supply, with much of the remainder coming from Canada.
The drop in new home starts, however, will completely negate any benefit that lumber producers might have felt from the market share increase.
“House prices have gone up by about 50 percent since 2020,” Wade says. “Now mortgage rates are remaining high at 6 percent, and people who locked in lower rates aren’t moving. That will remain a big headwind for the residential sector.”
Ken Simonson, an economist with Associated General Contractors in Washington, D.C., doesn’t expect things to get much better either, since the 30-year mortgage rate is typically driven by the 10-year treasury note, which in turn is influenced by the size of the federal deficit.
“The Congressional Budget Office forecasts that the deficit will remain stuck at $1.8 trillion through the next fiscal year, then will go higher,” Simonson says. “Without relief, it will be hard for that long-term interest rate to come down.”
Another variable on the horizon, the U.S.-Mexico-Canada Agreement (USMCA) is scheduled for review in July, which could have several potential outcomes.
“The three participating countries could agree to extend it for another 16 years, the U.S. could attempt to withdraw from the agreement altogether, or they could agree to extend it but for a shorter period of time,” Wade says. “That’s another potential headwind that could further complicate demand for materials.”
STEEL AND ALUMINUM
Steel and aluminum prices, on the other hand, are operating in a different reality. Simonson, who regularly analyzes the consumer prices indexes for construction materials, says aluminum went up by 30 percent and steel products by 17 percent in 2025.
“This is a direct result of the tariffs,” Simonson says.
As with Canadian lumber, the steel tariffs are not impacted by the recent U.S. Supreme Court decision. The ruling specifically addressed and invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA), such as “reciprocal” global tariffs, and steel tariffs are primarily enforced under a different legal authority.
While there has been a noticeable increase in the domestic production of steel, as opposed to international, it’s a transition that began several years ago and is not due to the recent tariffs, says Basu.
“The movement of production to America pre-dated the tariffs,” Basu adds. “During the global financial crisis of 2008 and even more so during COVID, suppliers and consumers of key inputs suffered major interruptions. “As a result, we have been observing the re-shoring in the production of materials of various types since 2010. I think we will see more domestic production because suppliers and consumers are looking for logistical simplicity.”
The tariffs, in fact, have done little to accelerate the movement of production to the U.S. at all.
“It takes years for a manufacturer to shift their production here, and by the time they do that, the current administration won’t be in power anymore,” says Basu. “That means they could potentially spend a lot of money moving into the U.S., then suddenly become a high-cost producer paying higher wages with stiffer environmental regulations (should the next administration ramp up the regulatory environment). In turn, that would enable their competitors to undercut them.
“It’s just too risky for them.”
Looking ahead, materials of all types will share one commonality—their pricing will remain increasingly unpredictable and potentially volatile in the coming months. Therefore, experts recommend that shed manufacturers use escalation clauses and closely communicate with suppliers to mitigate risks from price surges.
