More strong views on tariffs
The vast majority—72 percent—of respondents to an HBSDealer poll question say the United States should not pursue a policy of aggressive growth.
However, an aggressive approach has been launched —and then quickly paused.
An executive order on Feb. 1 brought into play a 25 percent tariff on imports from Mexico and Canada, and a 10 percent additional tariff on China. President Trump summed up his executive order in a tweet.
Early on Feb. 3, the U.S announced a pause of its tariffs on Mexican goods. The pause was announced after Mexican President Claudia Sheinbaum agreed to move 10,000 Mexican soldiers to the border for the purpose of blocking illegal drugs, including fentanyl. Later in the day, a similar 30-day pause was reached with Canadian Prime Minister Justin Trudeau. The agreement includes new assurances by the Canadian government to block drugs and money laundering. Prime Minster Trudeau has pledged some $200 million in funds to support the efforts at the border.
For the home improvement industry, tariffs on Canadian lumber continue to be a central and controversial topic. The National Association of Home Builders says the 25% tariff on softwood lumber products from Canada is in addition to an effective 14.5% duty rate already in place, means that the overall effective Canadian lumber tariffs would rise to nearly 40%.
“Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices,” said NAHB Chairman Carl Harris. “NAHB urges the administration to reconsider this action on tariffs, and we will continue to work with policymakers to eliminate barriers that make housing more costly and prevent builders from boosting housing production.”
The NAHB’s Jan. 31 letter to the White House can be seen here.
The National Lumber and Building Material Dealers Association stated that the LBM industry depends heavily on its trade partnership with Canada—the United States' largest trading partner—for softwood lumber and other building materials imports. A recent analysis by PwC estimates tariff revenues from Canadian imports could surge from $440 million to $107 billion.
“[The NLBMDA] is actively involved in conversations with leaders in Washington to underscore the significant impacts a 25% across-the-board tariff would have on the LBM and residential construction industry,” said NLBMDA President & CEO Jonathan Paine. “NLBMDA is leading discussions with our trade association partners including the National Association of Home Builders to advocate for responsible trade policies which do not negatively impact the U.S. housing industry.”
Meanwhile, with a deeply ingrained opposition to imports subsidized by the Canadian government, the U.S. lumber industry applauds the tariffs. It also discounts the idea that increasing the tariffs on Canadian lumber imports would lead to significantly higher home prices.
The U.S. Lumber Coalition argues that softwood lumber prices are currently low and have not kept pace with general inflation in recent years or the past two decades. Further, the body, which represents the interests of U.S lumber producers, points to stats showing that the cost of lumber makes up only about 1.3 percent of the total cost of an average new construction home.
"Continued strong enforcement of the U.S. trade laws against unfairly traded Canadian lumber imports is exactly what must happen to keep expanding U.S. lumber manufacturing and availability to build more American homes," said Andrew Miller, coalition chairman and owner of Stimson Lumber Company.
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