The US pallet market saw an early month jolt in low-grade prices on the heels of the March tariff implementation drama followed by renewed stability.
Uncertainty is rising across global trade as the White House prepares to unveil a narrower—but still significant—set of reciprocal tariffs, expected to take effect on April 2.
Administration officials have indicated that attention has moved away from introducing industry-specific tariffs, which are now unlikely to be revealed on the expected date. Instead, the United States plans to implement reciprocal tariffs aimed at roughly 15 countries with ongoing trade imbalances.
Treasury Secretary Scott Bessent has referred to these nations as the “dirty 15.” Although the specific countries haven’t been officially disclosed, the list will likely reflect recent recommendations from the US Trade Representative, which identified nations including China, Brazil, Canada, the EU and Vietnam.
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The March edition of the pallet newsletter includes:
- Updated pallet prices for six key metro areas
- Analysis into the uncertainty surrounding the implementation of tariffs under the Trump administration
- Insights into how a rebound in housing starts will impact pallet prices
Pallet price data
Fastmarkets assessed the Pallets, western softwood, GMA A-grade delivered Seattle market at $12.00-17.00 per pallet on March 26, narrowing up $1.00 from the previous month.
The San Francisco and LA markets saw comparable price increases to lower-end pallets driven primarily by rising western softwood low-grade costs. Trading ranges remained stable in Chicago, Dallas-Fort Worth, and New York as those markets were not as impacted due to more modest appreciation in southern yellow pine and other competitive species.
The Random Lengths low-grade random dimension composite price rose 5.20% on March 6 on the heels of the latest Canadian tariff implementation drama.
This was the largest week on week move to the composite in two years and the second highest post-pandemic single week move. Notably, the composite price increases were led by western softwood species, with other species lagging. Notably, composite price leveled out rising only 0.29% on March 13 and then holding flat on March 20.
Most pallet producers continue to report relatively stable end-use demand, thus isolating this month’s upwards pressure in the West Coast markets to low-grade lumber costs. Eastern markets felt the upwards pressure as well, but cheaper alternatives and a few instances of declining prices resulted in more stable pallet trading.
Supply concerns remain paramount for pallet producers. While most pallet producers source their lumber locally, many remain concerned that a supply-crunch on Canadian dimension lumber imports may drive up domestic low-grade pricing.
Clarity on the administration’s plans remains ever elusive. As to the present state of affairs – the latest release of the Harmonized Tariff Schedule (released on March 6) did not note any changes to the previous schedule aside from the broad sweeping duties on Canada, Mexico and China imports. As widely reported, the implementation of these new tariffs was delayed until April 2.
While the pause had some breathing a sigh of relief, the pallet industry is not out of the woods yet. Market participants were thrown a curveball on March 1 via an Executive Order directing the Secretary of Commerce to conduct a Section 232 investigation into the wood products industry as a whole.
Section 232 of the Trade Expansion Act of 1962 authorizes the President of the United States to impose tariffs on imports deemed a threat to national security. In order to be deemed a threat to national security, the US Commerce Bureau of Industry and Security must complete a “Section 232 investigation.” According to the statute, the Commerce Secretary must report the findings to the President within 270 days of initiation.
While the application of Section 232 tariffs to the wood products industry is a novelty, the legal mechanism has previously been applied to both Metals, and Agricultural products – thus providing a legal precedent for their usage in other commodities marketplaces. Notably, the Executive Order commencing the Section 232 investigation specifically identified not only timber and lumber, but also “their derivative products.” The Executive Order is also specific in targeting “vulnerabilities in the wood supply chain” – which is standard Section 232 language that leaves the door open for more broad sweeping tariffs that could include industrials, although it is hard to imagine that pallets and packaging.
At present, there are no solid indications on the likelihood that any potential exclusions will be granted or denied. Unfortunately, that is the approximate extent of what is currently verifiable.
As Fastmarkets ramps up its coverage of the pallet market, we invite feedback on specific pallet-related items for future reports. Contact ian.templeton@fastmarkets.com with comments or to contribute future pricing information.
Tariff tensions cloud trade outlook for pallets and wood products
Uncertainty is rising across global trade as the White House prepares to unveil a narrower—but still significant—set of reciprocal tariffs, expected to take effect on April 2.
According to administration officials, the focus has shifted away from industry-specific tariffs, which are now unlikely to be announced on that date. Instead, the US is expected to impose reciprocal tariffs targeting approximately 15 countries with persistent trade imbalances—what Treasury Secretary Scott Bessent recently referred to as the “dirty 15.” While the countries haven’t been officially named, the list is likely to align with the US Trade Representative’s recent guidance, which highlighted nations such as China, Brazil, Canada, the EU and Vietnam.
The administration may invoke emergency economic authority to implement the tariffs immediately on April 2, though planning remains fluid. Trump has also hinted at a shift in his trade strategy after criticism for previously backing down on Canada and Mexico tariffs, which were paused for USMCA-compliant products.
The announced Section 232 investigation into lumber imports—alongside the broader tariff environment—is creating a chilling effect on market activity. Many buyers are holding off on purchases, with trading now focused almost entirely on prompt truckloads. Preliminary anti-dumping duties have already risen from 7.66% to 20.07% as of March 3, adding to the market’s volatility.
While the reciprocal tariffs are expected to have only a modest impact on wood products due to existing low tariff baselines, Brazil and Europe stand out as potential hotspots for increased levies, possibly ranging from 5% to 10%. Meanwhile, sector-specific tariffs from the Section 232 investigation, originally eyed for April 2, are now likely delayed—though implementation is still expected sometime in April. Analysts anticipate a 25% tariff rate on imported lumber and panels from strategic sources, including Canada, Latin America and Europe.
In the short term, the US softwood lumber market is likely to see the sharpest price response. Even with current slack in domestic capacity, US producers will struggle to replace the 13–14 billion board feet of lumber historically supplied by imports. This will in turn drive up pallet prices in the short term as lumber makes up 80% of a pallet’s input costs.
Jonathan Gold, Vice President of the National Retail Federation, noted that the back-and-forth on Canadian and Mexican tariffs may not significantly affect port volumes, since most goods from those countries arrive by truck or rail. However, new tariffs on Chinese goods—already doubled from 10% to 20%—and uncertainty around April’s reciprocal tariffs are contributing to supply chain concerns. NRF now expects import volumes to decline in June and July as retailers adjust.
Just how much businesses are struggling to grapple with the ever-changing tariff environment can be shown in the below chart, which shows the Economic Policy Uncertainty Index for Trade Policy. The index became essentially vertical from October to November following Trump’s rhetoric about tariffs, and reading has only increased since then. Notably, the latest data available is for January, which is before businesses were introduced to a steady stream of new trade policies.
New US pallet consumption data unveiled
We’re excited to introduce our new proprietary data on US pallet consumption—a key proxy for measuring how many pallets are actively used across the economy. This consumption metric is built from three core components: total production, import replenishment, and export drain.
Total production includes both new and recycled pallets and is benchmarked against the FRED Industrial Production Index for wood containers and pallets. Import replenishment captures pallets entering the US alongside goods in transit, as well as a smaller number of directly imported pallets. Export drain, conversely, reflects pallets leaving the US as part of goods exports, in addition to directly exported pallets.
In upcoming editions, we’ll present a visual breakdown of each component and highlight how they shift over time, giving you a clearer view of the dynamics shaping pallet demand, so be sure to check out future newsletters.
Notably, the rate-of-change bars featured in this report reveal the industry’s cyclical nature, marked by pronounced peaks and troughs—patterns that many in the sector will recognize firsthand.
February sees modest pallet output growth, outlook remains cloudy
The pallet industrial production index rose 0.39% from January to February, which provides some rare stability for this metric after a turbulent year that has seen it stop and start repeatedly in the face of a volatile economic environment.
It remains to be seen when the Trump administration will provide some much-needed clarity for the business community, as investment will slow down substantially unless certainty arrives, which would in turn slow down production of pallets significantly.
Pricing in limbo: PPI stalls as producers wait for clarity
The Producer Price Index for pallets has remained flat since September, underscoring a broader sense of stagnation across the industry. Much like the wider lumber market, pallet prices have been stuck in neutral as producers wait for greater clarity on the direction of trade and regulatory policy.
Uncertainty surrounding the Trump administration’s shifting trade agenda—and its delayed rollout—has left producers hesitant to adjust prices or make significant investments. Ongoing port strikes have added further disruption, while the housing market, once expected to surge under a deregulation push, has instead stuttered under the weight of unpredictable trade policy.
Until a clearer picture emerges around supply and demand fundamentals, pricing movement across the pallet industry is likely to remain muted.
Pallet cost model
We continue providing detailed insights into the gross variable cost of producing a new western softwood GMA A-grade stringer pallet across six key metro hubs. This model highlights a side-by-side comparison of costs depending on whether #3 or #4 grade lumber is used in production.
The model is based on the availability of softwood lumber and takes into consideration the delivery cost from the mill to the pallet facility, which is partly why we see a lower cost in Seattle and a slightly higher cost in New York.
We must caveat that while certain manufacturers will have lower costs due to a higher utilization of automation, these are our estimated averages for each of the metro hubs.
Moreover, the total cost for each hub is calculated by adding the lumber cost and labor cost, which are labelled for each metro hub, alongside a nail cost that is uniform across the country, and miscellaneous costs, including smaller items such as gas, electricity, paint and staples.
Much like January, costs across all six metro hubs remained pretty stable heading into January, seeing almost no price movements as lumber prices continue to be steady.
Immigration policy casts shadow over pallet workforce
The pallet industry is beginning to feel the ripple effects of shifting US immigration policy. As President Trump vows to deport “millions and millions” of undocumented individuals, thousands of federal agents have been reassigned from other areas—including drug enforcement, terrorism, and fraud investigations—to support the immigration crackdown, according to Reuters.
While deportation numbers have not yet surged, the groundwork has been laid. The number of migrants crossing the southern border dropped to historic lows in February, and immigration-related detentions have climbed. Experts anticipate deportations will follow suit in the coming months.
The construction sector is already bracing for the potential fallout. Although few worksite raids have been reported so far, early deportations have affected an estimated 36,000 individuals, and fear continues to linger. Workers are still showing up—driven by necessity—but contractors warn that removing experienced laborers and limiting the inflow of new ones will inevitably drive up labor costs.
For pallet producers, these pressures are already translating into higher wages. Pallet industry wages rose 4% from October to January, outpacing the 2% increase seen across the broader manufacturing sector during the same period.
Framing and low-grade lumber prices surge ahead of Q2 correction
Framing lumber composite prices (FLCP) saw only a considerable increase in February, rising to $453 per MBF from $434 per MBF in January. Meanwhile, low-grade lumber prices, the primary input for pallets, similarly saw a notable price increase to $321 per MBF for February from $306 per MBF in January.
Our updated FLCP forecast assumption shows a burst of prices due to the anti-dumping duties and counter-vailing duties, followed by a correction in the middle of 2025. Altogether, the FLCP will average $524 per MBF, a 31% increase from the average in 2024. Prices will remain elevated but less volatile into 2026. We expect demand will outstrip capacity growth, but continued easing of severe duties and tariff levels will likely help unleash dormant Canadian supply and pull more European supply back into the US market.
As low-grade lumber typically follows the market for framing lumber, the prevailing turbulence for our FLCP is reflected in our Low-Grade Lumber Composite Price (LGLCP), with prices rising 37% to $439 per MBF in June 2025 before gradually tailing off into the third quarter of 2025 once a new equilibrium is reached and mills can fill in for the missing Canadian supply of lumber.
Housing starts rebound, but broader economic signals flash caution
US housing starts surged 11.2% in February to a seasonally adjusted annual rate of 1.5 million units, up from 1.35 million in January, according to the US Census Bureau. Improved weather conditions were a major factor in the rebound, particularly after a harsh January. Single-family housing starts rose 11.4% to 1.108 million units—their highest level in a year—while multifamily starts rose nearly 11% to 0.393 million units. The Northeast region saw a 47% monthly jump in total starts, though the Midwest remained soft. However, building permits dipped 1.2%, hinting at potential softness ahead.
Moreover, the post-pandemic apartment construction boom is winding down. While this helped drive rents down temporarily, the pipeline of new units is expected to run dry by the end of 2025. As more people remain renters due to high mortgage rates, rents are forecast to rise again, which could reignite inflationary pressure. This is particularly concerning for the Federal Reserve, as shelter costs make up nearly a third of the Consumer Price Index.
Other economic undercurrents point to mounting strain for consumers. According to WalletHub, the average US household’s credit-card debt (inflation-adjusted) surpassed $10,000 in Q4 2024 for the first time since 2009. Meanwhile, a Federal Reserve survey in February showed consumers estimated a 14.6% chance of missing a minimum debt payment within the next three months—the highest risk perception since April 2020.
Adding to the headwinds are weakening macro indicators, with the Federal Reserve recently downgraded its 2025 GDP forecast to 1.8%, down from 2.5% in December, citing rising inflation, a softer labor market, and trade-related disruptions. This potential onset of stagflation limits the Fed’s ability to cut rates. Finally, the goods trade deficit has ballooned to a record high, largely due to companies front-loading industrial supply imports ahead of anticipated tariffs. These purchases—mainly intermediate goods—won’t be offset by immediate consumer demand or investment, further dragging on Q1 GDP.
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