Results from Lumber Tariffs Highlight Folly of Protectionism

Filed in Capitol Hill, Trade by on May 18, 2018 15 Comments

lumber tariffsAs the Trump administration weighs imposing steel and aluminum tariffs on U.S. allies, most mainstream economists are warning that such protectionist trade policies will result in harsh negative repercussions for the domestic economy.

But the president insists this course is needed to shore up struggling U.S. industries. So who is right?

NAHB Chairman Randy Noel provides the clear answer in a recent op-ed published in The Hill by citing a real-life lumber tariff situation that has been flying under the radar for more than a year.

A report from Random Lengths shows that lumber prices jumped to another record-high of $568 per thousand board feet for the week ending May 18. That’s a 5% increase from last week’s previous all-time closing price of $543 and a 30% hike since the start of the year. Since the beginning of 2017, soaring lumber costs have added more than $7,000 to the average price of a new single-family home.

Take Action Today

You can take a stand by contacting the White House and Congress to express your concern on how tariffs — now averaging more than 20% on Canadian lumber shipments into the U.S. — are making housing less affordable for American families. Urge the president to resume talks with Canada to find a long-term solution to this trade dispute, and ask your U.S. representative to sign a bipartisan letter urging the administration reach a lumber trade solution with Canada.

Copy and paste the message below (you can also add the lumber prices in your market) and send it to the president.

Mr. President,

With a tariff on Canadian lumber in place, lumber prices have skyrocketed. My latest load of lumber cost 60% more than last year and that hurts my small business.  I respectfully request that you return to the negotiating table with Canada and redouble your efforts to reach a new softwood lumber agreement. It is our hope that in negotiating a new agreement with Canada, you will push for measures that take into account not only the impact of price fluctuations on the domestic lumber industry, but also on those secondary industries and consumers that rely on softwood lumber for their economic well-being. 

Thank you for considering my views.

Your member of Congress can also help. Ask your federal lawmaker to sign a letter urging Commerce Secretary Wilbur Ross to reach a new softwood lumber trade agreement with Canada.

You can also share your message on Twitter. Be sure to tag President Trump @realDonaldTrump and NAHB @NAHBhome, and include the hashtag #TariffsHarmHousing.

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Comments (15)

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  1. John Bitely says:

    Last i heard was our lumber is being used as a pawn because Canada won’t let USA milk in because they are protecting Canadian milk producers. We builders got dragged to a fight that wasn’t ours and we can’t win. My opinion is that steel and aluminum really isn’t a factor on this one. Protectionism on the other hand could be. To bad lumber got thrown in the mix when it is a product we can’t produce enough of to satisfy our USA needs.

  2. harsh negative repercussions for the economy! REALLY! We are already at that threshold. Builders are already feeling the impact of increases in softwood (extreme), shingles, drywall, concrete, windows, steel etc etc. Appraisals are not working for clients w lower down payments. Next will be layoffs. Then where will the economy be? Construction is a huge part of the American economy.

    I dont understand why people are so against fair trade! It has been so unbalanced for so many years. The President is just trying to bringing fairness to our trade agreements. Other countries know this! ALSO…..the President needs to open needed forestry in the US. We have millions of acres wasting. It is just part of good forestry management.

    • Mark McKenna says:

      Well said!

    • Tom says:

      Well said! Rather than assuming our president’s attempt to balance foreign trade is unsound just because it hurts you personally let’s just give it some time to let the dust settle. This country has been the dumping ground for everyone else’s products for decades and, finally, we have a leader who wants to try to improve the imbalance. Because of Congress and so many government agencies there is no such thing as ‘free trade” anymore. Trump’s not a politician. He’s playing in that field as a businessman. It’s a breath of fresh air. Give him a chance and, after his administration is over, judge the results. You may be surprised at the outcome.

  3. This article blames the increase in the cost of lumber on the tariffs, yet it does not disclose how much of the increase is due to the tariffs and how much is due to market changes. It is unfair to the members of this organization to publish such a one-sided analysis of lumber prices. Give us the real facts so that we can come to our own conclusions.

    • NAHB Now says:

      Since the beginning of 2017, soaring lumber costs have added more than $7,000 to the average price of a new single-family home, and a major contributing factor are the lumber tariffs, which have exacerbated market volatility and contributed to upward price pressure. Other factors include forest fires, shortages of rail cars and trucks and, to a lesser extent, increased demand for softwood lumber as the housing recovery continues to pick up steam. Keep in mind that the U.S. must rely on Canada to fully meet its lumber needs. More than one-third of the lumber consumed in the U.S. last year was imported, and more than 95% of the imports came from Canada. The U.S. has never been self-sufficient in meeting its domestic lumber needs. This is why NAHB is also working with Congress and the Trump administration to take steps to increase domestic lumber production. But if we keep artificial border restrictions in place, this will lead to lumber shortages, push prices even higher and act as a tax on American home builders and home buyers. This is why NAHB is urging the Trump administration to get back to the table and negotiate a fair and equitable agreement with Canada that will ensure American home builders and consumers have access to a reliable supply of softwood lumber at affordable prices.
      You can find more about the impact of the duties in this Eye on Housing blog post: http://eyeonhousing.org/2017/12/impact-of-the-canadian-lumber-duties-on-the-u-s-economy-in-2018/.

  4. Justin Hilts says:

    I agree with my Fellow builders above. The USA has been on the wrong end of Unfair trade by NAFTA and China for Decades. Its over. Now its our time to build our industries back to our full potential. We are going to Pay a higher price in the short term. This will jumpstart our Suppliers into buying local and American. The tariffs will be a useful negotiating tool in resetting the table to a fair deal. Everyone must keep patient while we negotiate and deflect the constant negative press.

  5. Norman Hyman says:

    Donald strikes again.

  6. keith neale says:

    It is wrong minded and misleading to think that the US is undergoing protectionist trade policies. We are only trying to level the playing field and move toward FAIR trade. The US has been ripped off for years with bad trade deals. I agree that FAIR trade deals will take time and will be disruptive but this endeavor toward FAIR trade must be pursued for the long term benefit of American business and our economy. If you are not making money in this great housing market then something else is wrong. The Trump Administration has great negotiators at work and the long term outlook is very bright indeed! When we pull together not only as a trade group but as Americans we can solve our problems and move the country forward in a positive way.

  7. Unfortunately too many builders are drinking the republican cool aid as a result of NAHB’s longstanding allegiance to the republican party. It’s pretty silly to write to my republican congressional people and president as we wouldnt be having this discussion in the first place were it not for their misguided ideas causing the problem.

    • this has been an issue for a long time and long before President Trump came along…. not a result of NAHB allegiance. Even the politicians dont seem to be in control. Much can be laid at the feet of the bureaucracies, EPA and those in control w their own agenda. We need to open responsible harvesting in the states.

  8. Don says:

    This article is misleading. As all builders buy from the lumber yard most all of them don’t even know real behind it all. Right at the onset of Trump talking about he 20% tariff somewhere around march 2017 the Canadians jumped the price of lumber 25%. in anticipation of the Tariff and fell about 5%. Somewhere we were all told there would be some kind of ruling on it in April or so but the ruling was not until August. The ruling is made from an independent board outside of the administration that NO administration has much control over.

    The Canadians already got there 20% coverage long before anything was imposed on them Since then lumber as continued to increase far past that. Blame it on supply and demand. fire, beetles or what ever it is way past the 20%.

    Above NAHB Said this in part of there reply to Barry.

    “But if we keep artificial border restrictions in place, this will lead to lumber shortages, push prices even higher and act as a tax on American home builders and home buyers”.

    This makes no sense at all.

    • Don says:

      Can you please explain what the “artificial boarder restriction on lumber are”? One of the biggest issue we have is getting the lumber to us whether it is by truck or train.

  9. Will says:

    Completely agree with many of the above comments. I want fair trade not free trade. I don’t agree with the president about many things. But I agree with his stance on this issue. If lumber prices are higher in the short term that is gladly a risk I will bear to move away from past trade imbalances.

    Also as a NAHB member I am fairly disgusted they keep beating this drum instead of concentrating on issues that could gain traction given the current administration. I would prefer to take this energy you are expending here and spend it on removing some of the over regulation we face in many markets.

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