Softwood Lumber Tariff Could Boost Homebuilding Costs

April 25th, 2017 by Editor

The White House announced on Monday that it will seek a 20-percent tariff on softwood lumber imported from Canada. The decision has the potential to increase costs for home builders, as well as for manufacturers of moulding and millwork products.

The National Association of Home Builders (NAHB) criticized the decision by the U.S. Department of Commerce to impose the countervailing duty on Canadian lumber, saying it will hurt American home buyers, consumers and businesses without resolving the underlying trade dispute between the two nations.

“NAHB is deeply disappointed in this short-sighted action by the U.S. Department of Commerce that will ultimately do nothing to resolve issues causing the U.S.-Canadian lumber trade dispute but will negatively harm American consumers and housing affordability,” said NAHB chair  Granger MacDonald, a home builder and developer from Kerrville, Texas.

The Window and Door Manufacturers Association (WDMA) urged the U.S. and Canada to return to the bargaining table and resolve the long-running trade dispute.

“Monday’s announcement is further proof that the United States and Canada need to enact a new softwood lumber agreement,” said  Kevin McKenney, WDMA’s director of government affairs. “The continued access to raw materials, including lumber, from domestic and imported sources is crucial to a robust housing sector. Both countries need to work cooperatively towards finding a long-term solution that ensures stability in the trade of softwood lumber.”

The trade agreement that has governed Canadian imports of softwood lumber since 2006 expired at the end of 2016. Uncertainty surrounding a new trade pact has driven lumber prices up 22 percent since the beginning of the year, NAHB says.

NAHB says these price hikes could have negative repercussions for millions of Americans. The association says it takes about 15,000 board feet to build a typical single-family home, and the lumber price increase in the first quarter of this year has added almost $3,600 to the price of a new home.

Additionally, NAHB estimates that the tariffs could eliminate more than 8,000 U.S.  jobs, mostly in construction. American workers would lose $498.3 million in wages and salaries, and the government would lose $350.2 million in taxes and other revenue.

The Department of Commerce’s decision is a response to a petition filed in November 2016 by the U.S. Lumber Coalition and the other groups. The petition was supported by producers accounting for nearly 70 percent of all softwood lumber produced in the United States.

According to the National Lumber and Building Material Dealers Association (NLBMDA), the dispute centers on the claim that the Canadian lumber industry is unfairly subsidized by its federal and provincial governments, because the provinces own most timber in that country. The prices charged to harvest the timber are set by those governments, while prices in the U.S. are mostly set through the open market. American lumber producers, as well as the U.S. government, claim this constitutes an unfair subsidy for Canadian producers and is thus subject to a countervailing duty tariff.

According to NAHB, 33 percent of the lumber used in the U.S. last year was imported. More than 95 percent of it came from Canada.

“This means that imports are essential for the construction of affordable new homes and to make improvements on existing homes,” said MacDonald.

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