A Looming $1 Billion Tax on Housing

Filed in Economics by on July 27, 2018 41 Comments

President Trump’s proposed 10% tariffs on $200 billion worth of Chinese imports — including nearly 500 products used in residential construction — could have major ramifications for the housing industry.

Of the planned $200 billion in tariffs, NAHB economists estimate that $10 billion of goods used by the home building community would be subject to the 10% levy.

Put another way, if the tariffs take effect, this would represent a $1 billion tax increase on residential construction.

Keep in mind that this tax increase would come on top of the current 20% tariffs on softwood lumber imports from Canada. Since the beginning of last year, lumber prices are up more than 40% due in large part to the tariffs, and this higher cost has added several thousand dollars to the price of a typical single-family home.

This is why it is absolutely imperative that the Trump administration resumes talks with Canada to find a long-term solution to this trade dispute that will ensure American home builders and consumers have access to a reliable supply of softwood lumber at reasonable prices.

At NAHB’s urging, 171 House members have sent a letter to the administration urging the United States to re-start softwood trade negotiations with Canada.

NAHB continues to urge the administration and Congress to oppose tariffs and to resolve international trade disputes in a manner that won’t tax American workers and consumers. We are also continuing to work on all fronts to find solutions that will ensure a lasting and stable supply of lumber imports into the United States at a competitive price.

For more information, contact David Logan at 800-368-5242 x8448 or Alex Strong at x8279.

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Comments (41)

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  1. Norman Hyman says:

    There is no rational justification for Trump’s tariffs on Canadian soft lumber. They impose an irrational burden on affordable housing. But Trump doesn’t build single family homes.

    • Billy Adkins says:

      Sorry but I agree with the President. If we must absorb higher prices to get a even trade so American business can compete on a level playing field then so be it. It is our responsibility as Americans to put country ahead of our personal greed. For example the EU, the rest will follow .

      • Dominic Giordano says:

        I’m with Bill here. I’ll muddle through while negotiations hopefully level out fair trade practices. It will benefit America in the long run.

        • Norman Hyman says:

          The tariff on soft Canadian lumber has nothing to do with fair trade because soft Canadian lumber dosent compete with an American product. If Trump means to hold soft Canadian lumber as a hostage for leverage on other concessions he wants, that’s Trump’s zero sum game aittitude. Our president shouldnt look on trade (or life for that matter) as a zero sum game.

          • Alan Nolan says:

            Trump doesn’t act as though he considers the various trade actions a zero sum game and labeling it that way doesn’t even make sense. I don’t like higher prices on components I need for my builds, but an American economy that gets back on a level playing field for trade benefits me in the long run because more Americans are better able to afford my product.

          • Norman Hyman says:

            The purpose of a tariff is to protect a domestic product. Precisely because Canadian soft lumber doesnt compete with American lumber, Trump’s tariff makes no sense. It only imposes a burden on affordable housing.

      • Sherise says:

        Then no one but the ultra rich will be able to afford to purchase a home. Not so great is your are middle class.

  2. Joe Honick says:

    How does this square with earlier news of NAHB’s endorsing the President’s SCOTUS nominee and other measures?

  3. Ron Jones says:

    It appears that all that worship lavished on the “Builder-In-Chief” by the Association went for naught, huh?

  4. Gary Jacobs says:

    Even if lumber prices do come down do you really think the builders are going to lower the price on their homes. If you believe that I have a bridge for sale.

    • dan says:

      Builders compete with each other. If I build the same house as builder “b” but ask $10,000 more, how many will I sell?

  5. Skip Shineman says:

    According to the framing lumber price graph, prices have come down significantly over the last 60 days. The same goes for aluminum. Yet I cannot get my distributors to pass this savings along. And the hysteria from NAHB and others continues. Why do you suppose that is?

    • The lumber price graph attached with this article show that the lumber prices went up purely on speculation and greed and now they are dropping fast because the hype didn’t match reality. the same will come true with the tariffs. All short term panic and fluctuation, which will settle our for the better in the long run. As homebuilders don’t we negotiate prices all the time too? Give Trump a chance to level a tariff playing field that has been out of level against us for years. Like the current economy which is much better than the pundits predicted, and the first tax cuts in 31 years which no other President has gotten passed, eliminating tariffs and supporting truly free trade (especially with self serving China) might work out to your advantage. Quit your short term griping.

  6. TCJATC says:

    NAHB fell over themselves for this administration, I guess we reap what you have sown

    • Steve Minor says:

      Are we really complaining about the economy? In North Carolina, things are booming.

      4.1% GDP

      I’d say we’re benefiting big time for this administration for a host of reasons.

      Lumber index has been dropping for several straight weeks.

  7. Mark Marcoplos says:

    I agree with some of the former comments. The NAHB has supported the Republican agenda by endorsing candidates that support Trump. This is the end result of that political calculation. The NAHB contributed to this mess.

  8. mike thornton says:

    Chinese…Chinese…Chinese…
    Let’s cut with the Chinese already and start using our own resources.
    Please don’t blame CHINESE on POTUS…He’s doing a great job with
    the Gigantic Mess he inherited. We finally have someone who is looking
    out for the interest of the American People with long term thinking.
    Our other Presidents (I use the term loosely) sold out to the Chi-Comms years ago.

    • CT says:

      Don’t forget about European leftists, that is how former presidents have allowed them to engage in protectionist polices to prop up their economies and failed ideology. I was highly entertained by Macron’s (French President) reaction to the deal between Trump and European Commission President Jean-Claude Juncker a few days ago. Trump and Juncker agreed to work towards zero-tariffs. (a huge win for Trump) Then Macron comes out and says, oh no, we don’t want that, we aren’t willing to give up our agricultural subsidies, [we don’t actually want free trade, we just want to return to the status quo than benefited us.] It totally showed the reality, rather than the distorted view, huge blunder by Juncker.

  9. Marlin E Moul says:

    Regarding the article about a tariff on Chinese products being used by builders, perhaps the builders should start using products made in the USA. Stop using Chinese junk.

    • greg mooney says:

      NINE TENTHS of the products we buy are from China, with few competitors from the US now that they have closed up shops. Look at your nails, hardware, even windows in some cases. Many U.S. companies import from China in that company’s packaging.

  10. Harris Woodward says:

    True Conservatives do NOT pick winners and losers, which is just what this trade war is all about. Conservatives favor free trade and open markets. The stupid man occupying 1600 Penn Ave is not conservative. When will the GOP figure this out?… Only after taking a beating this November.

    • Derek says:

      Harris your assessment is off, and seemingly just political. Picking “Winners and losers” does not apply to foreign nations to define “conservatives “.

  11. We just had price increases between 6% and 8% on HVAC products.
    Supposedly due to the steel tariffs.

  12. Lamar Turk says:

    No gain has ever been achieved with no pain!
    Don’t forget NAFTA started ruining our industrial nation in ‘92-‘93 when enacted. ALL the other countries will come around when they find Trump is much stronger than the posters of this venue!! “Make America Great Again!!!” I am a single family home builder who wasn’t able to pull a single new home permit from November of ‘08 to Jan., ‘15. We need this policy to return manufacturing back to our great nation!! With the new tax structure and all the other measures our current administration Has Already enacted, everyone across America will soon see the tariff benefits!! They will All come to the table!!

  13. Steve Minor says:

    As I see it, Trump’s tough approach has turned out pretty good every single time while our diabolical Main Stream Media pushes doom and gloom and failure 247. The EU just bent their knee on Trump’s proposal of having no Tariffs. NK’s Kim reluctantly bent his knee because he listened to Trump’s vision for NK could be prosperous country if it will change it’s posturing for military respect, all the while our media said the meeting with Kim was disaster and an embarrassment. What can be harmed from “What do you want?”…. “Here is what we need?”

    Trump got several NATO members to step up immediately to meet their financial commitments and promises. How did he do it? By simply saying, “you have to do your part, America and her tax payers are no longer going to be taken advantage of ”

    Iran is next up the Trump hit list as their economy is suffering from tougher sanctions. What does our media cover and demand? They demand to know exactly what Trump and Putin discussed behind closed doors. smh.

    The bottom line is United States is flexing her muscle via the President’s method of negotiations to even the playing field for American workers and American businesses, so for the short term it will feel uncomfortable. Let’s give it some time to play out. Trump is absolutely getting things done for greater good of America…while our media goes negative 247. It truly amazing.

    4.1% GDP and Trump is just getting started. Our political leaders have been selling us out for decades…Does anyone think it’s fair to our businesses to be subject to hi tariffs while foriegn goods come in here by endless super ship tankers?

  14. Paul Dufford says:

    I see this as part of the negotiation process on foreign trade with both China and Canada to bring trade deals back in alignment and more fair. To call this a tax is wrong, it is simply a trade deal and imposing tariffs on goods being brought into our country to get better export and tariffs removed from other US goods in other sectors of our economy. Say what it is instead of twisting it as our media does.

  15. Where does the tariffed monies go?

  16. Nate Prewitt says:

    How does the NAHB both oppose tariffs and support American workers in the same sentence? Tariifs are necessary to offset foriegn governments unfair trade policies and subsidies to their companies. “American Workers” aren’t only home builders, they manufacture products for the home building industry.
    And BTW, “$1 Billion” sounds like a heck of a lot, but divide it by the amount of square footage currently under construction Nationwide, and it’s insignificant, especially in light of the price increases already absorbed in to the market. Continue to level the playing field! Thank God for consumer confidence, and business confidence in our new direction.

  17. Mark Tipton says:

    For those of you that want to use this article as a Trump bashing card please remember the good news is that we have an economy that will allow us to continue to build houses!We sure didn’t before Trump! The last time I checked we really don’t have to buy products from China or Canada? I am sure that each and every product that is on this list is produced in the good ole USA and if it isn’t then it is another opportunity for us to strengthen our manufacturing opportunities. The only problem that I see is the GREED factor imposed by the American companies that produce lumber and other products. Have you ever stopped and asked yourself how much of your lumber is coming from Canada? If you are in the Northeast then you are probably getting a lot of material from Canada which was good for them and good for us however we have to be playing on a level playing field for the long run. We have enough National resources to provide lumber in this entire country without the fear of running out. We should encourage a level playing field and find our own products in our own homes. I seem to remember that when our builders were producing 1.8 million housing starts a year that we didn’t have any shortage of materials; why are we having them now at 1.3 million starts? Many of the smaller builders don’t have the opportunity to buy products from China unless they are buying through and American outlet and then they are paying near market value. Why not just buy American? We have it; we produce it; and as long as we have a growing population people will still need it. Larger builders have the opportunity to buy from other countries because of the volume that they have and we need to help them as well. They have the ability to negotiate with major suppliers and get better pricing and that is just part of life that we are lucky enough to be a part of. It is called Capitalism! The Home Building Industry has always been a roller coaster ride and we have proven that we are resilient and whatever is thrown at us we will stand together and fight for homeownership and a decent and safe place to call home whether it is an apartment, a single family home or our affordable housing. NAHB is the voice of the housing and they are not perfect but they do have a pretty good track record of helping us resolve issues. Let’s support NAHB’s position and the President to get us back to a level playing field once and for all.

  18. Samuel Gaines says:

    The Chinese are traditionally proported to think and plan proactively and generationally while America’s Congress traditionally act reactively and think bi-annually it seems. How is it even possible to negotiate to an equitable trade deal given that disadvantage? Thank goodness our forefathers had the foresight to establish the Executive branch of government. Thank goodness the American people from time to time have the collective will and intelligence to elect a pragmatic leader unafraid to think and act long term and so happens to knows a thing or two about human nature and how to negotiate. Patience is essential in effective negotiations. It is well recognized that patience is not a trait that can be attributed to the “media”.

  19. Mari Charles says:

    Let’s hope that with the significant investment we make in NAHB they use their influence to affect change with regard to this issue.

  20. TP says:

    Never seen so many “conservatives” applaud such massive tax increases. Dance around it all you want. Call it what you want. It’s a tax increase. The price of lumber was what the price of lumber was, because that is what the market had set it at. Now, everything basically jumps 10, 20, 30% overnight. That is an artificial market price.

    So far I haven’t seen labor rates go up proportionately to what all these goods are going up. So, the future home buyer is stuck holding the bag, unless all the builders want to eat all these increses so they can do their part help the president’s agenda.

    Yup, didn’t think so.

  21. Robin Sproul says:

    I’m still looking for the weapons of mass destruction. We felt significant pain rooting them out at the President’s insistence, but it was short-term. The media was on board–the boot-lickers. They always do that.

  22. Gary says:

    The article states “Since the beginning of last year, lumber prices are up more than 40% due in large part to the tariffs.” It appears from the chart that lumber prices started climbing before the tariffs were implemented which, I think, were announced in April 2017. Does anyone know what date the “official” tariffs started? I thought it was closer to the end of year 2017.

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