What the New Lumber Tariffs Mean for Contractors (and How to Stay Ahead)

You just quoted a $35,000 kitchen remodel. Your customer agrees to the scope, likes your work—and then hesitates at the price. Two weeks later, lumber costs jump another 5%. Now you’re stuck: Honor the original quote and eat the increase, or go back and risk losing the deal entirely.

New tariffs implemented in October 2025 added a 10% duty on all timber and lumber imports, with an additional 25% tariff on kitchen cabinets and bathroom vanities. 

Russell Lowe, General Manager of Fortress Building Products, sees the impact daily: “Prices for contractors and builders will likely increase due to the tariffs. In addition, we’ll see general instability in the supply chain, and it may be difficult to get materials in some places.”

These aren’t temporary market fluctuations. They’re structural changes reshaping how contractors price jobs, source materials, and close deals.

What’s actually happening with lumber tariffs

The tariff landscape shifted dramatically in 2025. Here’s what contractors are facing:

The October 2025 changes: Section 232 tariffs imposed a 10% levy on timber and lumber imports and 25% on kitchen cabinets and furniture, with cabinet tariffs scheduled to double to 50% by January 2026.

Canadian lumber complications: Canadian softwood lumber now faces a 35% tariff. That more than doubles the previous 14.54% tariff rate from anti-dumping and countervailing duties.

Why this matters: The U.S. imports around one-third of the softwood lumber used annually, with nearly 85% coming from Canada. When your primary supply source gets more expensive, alternatives become scarce fast.

This tariff volatility has raised lumber prices nearly 13% in the last year. For contractors, that translates to squeezed margins, repriced bids, and customers who suddenly can’t afford projects they were ready to start.

How tariffs are hitting contractor profitability right now

The tariff pressure shows up in three ways:

Material cost volatility: Lumber yards are adjusting prices weekly instead of monthly. The 2025 tariffs are projected to increase overall consumer price levels by 1.3% in the short run, translating to an average per household consumer loss of $1,800. Your customers feel this squeeze, making them more price-sensitive even as your costs climb.

Supply chain instability: Some lumber yards and distributors delayed purchases while waiting for tariff clarity. That creates unpredictable lead times. One week materials arrive on schedule; the next week you’re scrambling for alternatives mid-project.

Bid validity problems: Lowe explains that “bids are kind of being adjusted on the fly. Bids may not be good for as long as typical in the pre-tariff environment. Now, ‘pricing subject to change’ is a warning with a lot of bids since it’s so fluid with costs and the tariff environment today.”

The reality: Construction costs accounted for 64.4% of the average price of a new home in 2024 compared to 60.8% in 2022, marking a record high since the NAHB started tracking this data in 1998. And material prices are only accelerating.

5 strategies to protect your margins despite tariffs

Contractors who adapted quickly are not only surviving the tariff environment—they’re using it to separate themselves from competitors still waiting for prices to stabilize. Here’s what’s working:

1. Shorten your bid validity periods 

Stop honoring 90-day quotes when material costs swing weekly. Lowe’s advice is direct: contractors need shorter bid validity periods because costs change too fast to honor long-term pricing.

What to do: Cut bid validity to 30 days maximum. Add clear language: “Material pricing valid for 30 days from proposal date. Projects starting after this period may require pricing adjustment based on current material costs.”

Your script: “Given current tariff uncertainty, we’re guaranteeing this price for 30 days. After that, we’ll need to adjust based on material costs at project start. Let me know if you’d like to lock this in.”

2. Build material escalation clauses into every contract

Fixed-price contracts made sense when lumber cost $450 per thousand board feet and stayed there for months. Now? Lumber prices fluctuate constantly—jumping by as much as 17% in a single month—with sudden swings driven by tariff announcements.

Include escalation language: “If material costs increase more than 10% between contract signing and project start due to tariff changes or supply disruptions, actual material costs will be passed through with documentation.”

This isn’t about gouging customers. It’s about staying in business when tariffs shift mid-project.

3. Explore alternative materials before customers ask

Lowe points to steel framing as one solution gaining momentum: “We’re encouraging contractors to kind of look at alternate building materials. Steel framing being non-combustible, class A fire rated. There’s some push there to look at steel instead of wood already.”

Your opportunity: Be the contractor who presents alternatives before the customer panics about lumber costs. Position steel framing, engineered wood products, or composite materials as premium upgrades with better warranties and less maintenance—not desperate substitutions.

4. Accelerate material purchases strategically

Lowe notes that contractors are “accelerating purchases after winning contracts” to lock in current pricing before the next tariff increase hits. But be smart about this.

What works: For confirmed projects starting within 90 days, buy materials immediately upon contract signing if you have adequate storage and cash flow. For speculative inventory, focus on long-lead items like cabinets facing the 50% tariff increase in January 2026.

What doesn’t work: Stockpiling materials you don’t have storage for or tying up cash for projects that might not materialize. One rained-out project with materials sitting in the yard doesn’t help anyone.

5. Use financing to close deals tariffs are killing

When tariffs push your $28,000 bathroom remodel to $32,000, many customers can’t bridge that gap with savings. But monthly payments? That’s a different conversation.

Acorn Finance connects customers with multiple lenders competing for their business, which means better rates and higher approval odds. You get paid upfront. They get manageable monthly payments. The $32,000 project that felt impossible becomes $380/month, which is suddenly feasible.

The script that works: “I know this number is higher than you were expecting. Between tariffs and material costs, everyone’s feeling the squeeze. Would it help to see what this looks like as a monthly payment? We work with Acorn Finance, which lets you compare multiple financing options to find rates that work for your budget.”

What’s coming next with tariffs

Lowe’s long-term view: “Tariffs probably will drive more domestic production. I would think it’s also going to raise prices obviously in the short term. And even with the shift to domestic production, if supply is more expensive elsewhere, I would expect the domestic prices to rise as well.”

Translation: Don’t wait for prices to drop. They won’t.

U.S. sawmills operated at just 64% capacity in the first quarter of 2025, and it will take years until domestic lumber production ramps up to meet the needs of American homebuilders. Supply gaps can’t be filled quickly, even with tariff protection for domestic mills.

What contractors should watch:

• January 2026 cabinet tariffs doubling to 50%: If you do kitchen or bath remodels, warn customers now about the January increase. Close deals in Q4 2025 to lock in current cabinet pricing.
• Ongoing Canadian lumber negotiations: NAHB is urging the administration to enter negotiations with Canada and other global trading partners to resolve ongoing trade issues. But betting on tariff relief is risky when your margins are on the line today.
• Labor costs compounding material increases: 92% of construction firms report having a hard time finding workers to hire, with 45% saying labor shortages are causing project delays. Material tariffs are one cost pressure; scarce labor is another. Combined, they’re lethal to unprepared contractors.

Your 30-day action plan

Don’t wait to see how tariffs shake out. Lowe’s advice to contractors: “If you’re worried about pricing or supply worsening in the future, you may want to get ahead of things while supply is good and prices are where they are.”

Week 1: Update your contracts and proposals

• Shorten bid validity to 30 days
• Add material escalation clauses with clear triggers (10%+ increases)
• Include “pricing subject to change due to tariff environment” language

Week 2: Diversify your material options

• Research steel framing, engineered lumber, or composite alternatives for your most common projects
• Get pricing from at least two alternative suppliers for critical materials
• Create comparison sheets showing customers premium material benefits (warranties, maintenance, fire resistance)

Week 3: Establish financing partnerships

• Research financing options like Acorn Finance that let customers compare multiple lenders
• Practice your financing conversation script until it feels natural
• Add financing information to your proposals and website

Week 4: Communicate proactively with customers

• Contact clients with pending quotes about tariff impacts and shortened validity periods
• For Q1 2026 projects, warn about January cabinet tariff increases
• Position yourself as the contractor helping them navigate uncertainty, not just raising prices

The bottom line

The contractors thriving in today’s tariff environment aren’t the ones with the lowest prices. They’re the ones adapting fastest.

Your customers understand prices are rising. What they need is a contractor who explains why, offers alternatives, and provides solutions like financing that make projects feasible despite higher costs.

Lowe’s final insight: “We don’t see this going away and we don’t see the tariffs easing. So the time is now.”

The question isn’t whether tariffs will affect your business. They already are. The question is whether you’ll adapt before your competitors do—or watch them close the deals you could have had.

Ready to turn price objections into closed deals? Discover how contractor financing keeps projects moving despite rising costs.