Lumber Tariffs Threaten Thousands of U.S. Jobs, Raise Housing Costs

Filed in Economics by on June 27, 2017 22 Comments

In a move that will raise housing costs and price countless American households out of the housing market, the Commerce Department on June 26 imposed a preliminary 6.87% anti-dumping duty on Canadian lumber imports on top of the 19.88% countervailing duties announced in April.

In an official statement, NAHB Chairman Granger MacDonald said that the combined duties are “basically another tax on American home builders and home buyers that will jeopardize affordable housing in America.”

The 19.88% countervailing duty is intended to compensate for government subsidies that Canadian firms allegedly receive, while the 6.87% anti-dumping duty is intended to bridge a supposed gap between the price that Canadian lumber producers are selling lumber in the U.S. and the “fair market price” determined by the Department of Commerce. Combined, the two duties impose a 26.75% total tariff on Canadian lumber imported into the U.S.

In an Eye on Housing blog post, NAHB senior economist Paul Emrath discusses the impact the duties will have on the housing market and the economy. The analysis shows that the tariffs would boost lumber costs by 8.8% for U.S. consumers and add $1,700 to the cost of a typical single-family home.

Further, the annual effects of this tariff in 2017 include a loss of:

  • 11,336 full-time U.S. jobs
  • $685.5 million in wages and salaries for U.S. workers
  • $481.8 million in taxes and other revenue for governments in the U.S.

These losses of wages, jobs and taxes are net losses that take into account the increases in wages, jobs and taxes in the domestic sawmill industry. The reduction in jobs is not limited to the construction industry: Jobs are also lost in businesses that sell and transport building materials, provide architecture and engineering services, etc.

View further analysis in this Eye on Housing blog post.

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Comments (22)

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  1. Rick white says:

    In a labor challenged market, now we have a politically explosive materials market. Tracking current costs and passing them along to the builders is a challenge as well.

  2. TP says:

    What happened to the republican “free market” mantra?

    • Steven Carroll says:

      This administration talks a big game but they are untrustworthy. I wish NAHB had realized this before their endorsement last year.

    • Jimmy Deer says:

      America 1st. There is no way to compete with markets that are government subsidized. They’ll just keep dropping their prices until the US market can’t compete. Then, when the US market is gone their prices will sky rocket.

  3. Kurt Schwarz says:

    Lumber is such a price competitive commodity, I’m much more worried about all the other products that go into our homes???

  4. Steve Wobbema says:

    Its a shame that the major news networks think Trump’s tweets are more important than an issue like this that impacts builders and consumers nationwide. Yes, we all want “fair trade,” but at what cost? in this case, U.S. consumers will bear the brunt of these cost increases, while our already bloated government gets more revenue for pork barrel projects or employee raises. Such added government revenue should be dedicated to paying down our national debt or reducing our income tax burden.

  5. John Holahan says:

    Has the NAHB lost its influence and clout? Lumber tariffs and immigration reform should be paramount. Our market is just beginning to recover from the 10 year old crash. There are many markets experiencing tremendous growth but it hasn’t been long enough to form a trend. I believe the building industry is still tenuous, labour and material costs can derail any housing market. I understand that lumber is a commodity and subject to price swings based on supply and demand, tariffs are a thumb on the scale.

  6. I think if the NAHB is so aghast at this issue, maybe they should take a look at the effect the HOLCIM and LAFARGE Cement company merger has had on affordability in housing. 26% increase in March of this year alone! There are far more dollars in concrete in the average home than lumber alone.” Lets not pick hard fights to win ” seems to be the mantra of the NAHB in this regard. Trump bashing isn’t fashionable and I don’t know many liberal builders who aren’t government contractors. Lumber higher? Meh, lets talk about your footings, your siding, your driveways, your walkways, your garage slabs, basement slabs, stem wall and basement walls… there is always competition available for WOOD… not so much for concrete!

  7. Clinton Peterson says:

    Well as I agree with the premise of most of the previous comments, lets remember why the tariffs are being issued. When a competitive market is being subsidized by their government our jobs and related industries are at grave risk. Let me remind all of you about how our steel industry was nearly completely wiped out by unregulated or Free Trade with China. So with that being said and before everyone jumps me for my opinion. I must say that we need to be careful and not get tunnel vision with one product. We have been able to purchase cheaper lumber, but at what cost to local industry, this happens in all industries. as one blogger had stated earlier, he is more concerned about what may be coming down the line with all the other products we buy. Lumber is singularly one of the most expensive Packages we purchase. Lots of pieces to that puzzle, however we should have been moving at a slower pace towards where e are now if the Canadians aren’t willing to be competitive versus dumping through govt assistance, If we had been, this conversation wouldn’t even be being had. Trump inherited a nasty goose egg with this one and his administration had to be the lone voice in the chaos. He will never make everyone happy and that is a good thing. The perfect compromise, everyone walks away a little disappointed. The right choice is rarely the popular one. Hate the situation not the person trying to correct it, he certainly didn’t create it and as a businessman surely doesn’t want to pay more for products than absolutely necessary. Pleas be kind with your remarks, this is intended to generate a conversation not ugly personal attacks. keep it clean and constructive. Please.

    • Eric says:

      Only issue is that every time this gets brought up, the courts side with Canada. We aren’t dumping or subsiding. We have more lumber (lots of undeveloped land) and lots of land that isnt privately owned. Since there aren’t landowners who want the biggest cut they can (which is fair, I would too in their place) and since supply is much higher, Canada can offer cheaper, better lumber. This is just what a free market does.

  8. Gene Raley says:

    The market in the South is not as fluid as it is elsewhere. We are still fighting for every sale and the customers are complaining about the cost. Maybe I need to throw in the towel and go get that grill job that the Democrats and Obama created for me, or maybe get on assistance like millions and millions are doing. Personally, I would rather do things for myself and forget about the “charity” of others and I probably will stick to that and continue to make the below minimum wage that I currently make as that is what our government wants. This is probably why I dropped my party affiliation ten years ago and became an Independent.

  9. George says:

    Think of added shipping costs for Alaska too.

    The piling on of tariffs seems like part of what drives the Trump Administration’s effirts to eliminate or reduce national monuments so they can be logged and mined. Let’s spend our legacy, whoopee.

  10. S. lewis says:

    What would one expect from a square peg in an Oval Office?

  11. Ricardo Blanco says:

    This tariff is supposed to give the purchasing advantage to our domestic producers.0

  12. David Profitt says:

    I’m thinking there is a lot more to this story than is getting told here. For one, the Dept of Commerce was staffed by Obama and like most of the government agencies, those people are still there. Not sure about the whole “competitive price” thing. As a 30+yr builder, I remember when those tariff’s were first enacted, to supposedly “level the playing field” with domestic timber products, primarily studs. Right after the tariff was put in place, domestic lumber prices jumped the same amount so the price disparity still existed. The reason: it was all about profit margin for the big corporations, just like the steel and textile tariffs which only helped the big corporations in these industries who took the profits and used them to move their manufacturing offshore.
    And finally, I don’t know about the rest of you guys, but the Canadian Spruce IS a superior product to what we grow here, and by the laws of capitalism, should be more expensive. And putting more tariff’s on it to make it “competitive” isn’t going to make the domestic products any straighter and stronger. It’s all just a money game and the builders are, as usual, the losers. And as someone else here mentioned, lets talk about the price increase in cement. I’m paying $155yd. A year ago it was $120 a yd.

    • TP says:

      So there no employees working for Dept of Commerce who were hired prior to Obama?
      Get real. There are career employees working in every dept in gov’t and those career employees are Democrats and republicans.

  13. Ricky Wendel says:

    Well President Trump is trying to make American Lumber more competive with Canidan Lumber. As a builder for 35 years I believe we are being unjustly treated. For 10 years we put up with Obama, the Mortage Crises, Wetlands, and Government Regulations on our industry. We are one of the Biggest Industries in the Country and a part of every person in the country to own an affordable home. Builders need to make a profit to service callbacks and unforeseen problems with homes and homebuilding. When our industry does good the ecmony normally follows the Home Builders. We need a chance to do better in these good times and make a decent profit on our Homes. Sure the stock market is doing great, Trump is creating jobs all over the economy upset in home building. Does this go against his Carrier deal and other company he helped out. It is so depression to be in a business that is so hard to make a decent living. Step back and look at what you are doing to a business that has suffered for 10 straight years. A little compassion would be appreciated in the Home Builders Industry. I guess reality is something we must always deal with in our industry. Sometimes you cannot add the new expenses to the cost of a home, Apprasials and Comps govern the price.

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