The U.S. Commerce Department has released a report concluding that the United States must double its tariff on Canadian softwood lumber, raising the figure from 9% to 18%. As reported by Fortune, the increase would seek to combat alleged unfair Canadian trade practices, where lumber production is subsidized by the Canadian government.
Canadian softwood lumber accounts for over 25% of all softwood lumber used in the U.S. construction sector. A doubling of tariffs on imports would further compound the major increase in construction timber prices across the United States, which have risen 323% since April 2020 and now sit at an all-time high.
As we detailed last week, timber prices are one of several factors currently exacerbating America’s housing shortage, where inflated costs have added an average of $36,000 in expenses to each new development. The current disruption to material supply chains caused by the COVID-19 pandemic may take between 18 months and two years to fully resolve, according to the 2021 Autodesk Construction Outlook.
The increased tariff recommendation from the Commerce Department is the latest in a decades-long dispute between the United States and Canada over timber imports. In 2017, the Trump administration imposed a 20% tariff on imported softwood lumber from Canada, arguing that Canadian timber products were being sold below market rates due to subsidies from the Canadian government. At the end of 2020, the administration cut the tariff to its current 9% level, in response to soaring timber costs during the COVID-19 pandemic.
The latest potential tariff increase has been met with anger by home builder groups. Reacting to the news, the National Association of Home Builders said: “At a time when soaring lumber prices have added nearly $36,000 to the price of a new home and priced millions of middle class households out of the housing market, the Biden administration’s preliminary finding yesterday to double the tariffs on Canadian lumber shipments into the U.S. shows the White House does not care about the plight of American home buyers and renters who have been forced to pay much higher costs for housing.”
Meanwhile, the U.S. Lumber Coalition has welcomed the proposition. "A level playing field is a critical element for continued investment and growth for U.S. lumber manufacturing to meet strong building demand to build more American homes,” says Jason Brochu, the organization’s Co-Chair. “More U.S. lumber being produced by U.S. workers to build U.S. homes is a win-win for America.”
10 Comments
America does not have a housing shortage: it has an affordable housing shortage. It is important to understand the difference. The lack of affordable housing is not based on a lack of housing units but rather on the commidification of all real estate.
In addition, buyers of existing housing and renters are unaffected by increased lumber prices that affect new construction. This kind of PR spin ignores the economic basis of the affordable housing issue to support the economics of for-profit development.
"We can't afford to build affordable housing!"
“ This kind of PR spin ignores the economic basis of the affordable housing issue to support the economics of for-profit development.”. How exactly does a non-profit development scheme work?
the article confuses the terms timber and lumber. lumber prices have gone up dramatically. timber - counterintuitively - has dropped.
https://www.bloomberg.com/news/articles/2021-04-20/lumber-s-version-of-a-crack-spread-is-exploding-from-cheap-trees
“At a time when soaring lumber prices have added nearly $36,000 to the price of a new home and priced millions of middle class households out of the housing market, the Biden administration’s preliminary finding yesterday to double the tariffs on Canadian lumber shipments into the U.S. shows the White House does not care about the plight of American home buyers and renters who have been forced to pay much higher costs for housing.”
GFY, NAHB. Fucking ghouls.
Why does the US need to be importing materials at all -- anytime you are moving materials over long distances is a design failure. If we need to grow more forests, let's do that. Otherwise, concrete technology in the US has developed greatly (German currently uses US technology better than the US does) which should be utilized. Use the materials and design strategies that best fit in the region you are working in.
We import because we are no longer a manufacturing and production. We can harvest but they have to be shipped to China or other places before it can be returned back to U.S. to be used. This is because of several factors among them.... all those NIMBYs that prohibits industrial development and then many other factors that makes Americans too expensive. Even Federal minimum wage is more than two times too high to be competitive in the world stage for production because we have to pay people less than $3.50 an hour to be competitive with many countries. To compete with China, we'll have to be working at $0.75 to $1.00 an hour. This is why we are just too expensive. Also every item is inflated in costs. We have to reverse inflation and deflate. We been inflating costs for 4 DECADES too long.
Logs are being shipped to China along with finished products (lumber) from the US and Canada but my sense is that the finished products are used in China, not shipped back to the US. It is the China demand for lumber that is pushing up prices. A 9% or even an 18% tariff by the US on Canadian forest products would not cause a 300% rise in prices.
Hello! .....Subsidize US lumber than.....tariffs just increase price for consumers. This hyper inflation is getting out of control , I think our leaders think we can inflate our way out of debt but, it causes a serious long term impact if the world views our dollar as toilet paper. Minimum wage at 100 bucks soon and happy meal 50 bucks, invest in wheel barrows now !
Wow. I don't know where to start. Canada i.e. the Canadian government has been subsidizing any and all Canadian factories, shops, woodworking entities with free lumber. No matter what business you have, if you need lumber in Canada it is essentially free. No American company can compete with a Canadian company that utilizes Lumber. I don't care if you call it Lumber, wood, soft wood, framing components, pulp, let's stop with the nonsense. American companies have to put up with an environmental protection agency that is uncooperative, antagonistic and off the rails. Whereas, in Canada the environmental protection agency is extremely cooperative. In fact the Canadian desire to create "fire breaks" in "Forrest Like Land", i.e. 98% of Canada allows the Canadian government to consider the lumber user as a helpful governmental contributor. As for affordable housing; the idea that Lumber has anything to do with it is ludicrous. The problem is clearly building codes, zoning ordinances, city rules and regulations, rent control, rent stabilization and I can go on and on. I have been tackling these exact issues for more than 45 years. Affordable housing is caused by government intervention in the market. That's it. Government intervention in the market. Government created the issue and the government must back off in order to have it rectified.
This dispute has been going on for many years. The American argument that Canada is "dumping" lumber in the US arises from the fact that almost all Canadian lumber comes from government-owned land. In contrast, US timber is mostly on privately-owned land. The governments, mostly provincial in Canada, charge what is referred to as a "stumpage" rate for the timber. The American lumber producers argue that this rate is too low and thereby represents a subsidy. This dispute has gone to the World Trade Organization over and over again and every time they have ruled that the stumpage rates are fair and that Canada is not subsidizing its lumber. The lower prices are a function of the lower Canadian dollar and manufacturing facilities that are able to operate on a much larger and more efficient scale than is typical in the US. A succession of US governments, under pressure from American producers, has chosen to ignore the findings of the WTO and have imposed a variety of tariffs on Canadian products. This sort of protectionist response fails to take into consideration how many other US-made products are purchased by Canadians.
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