Dispute on timber customs duties may potentially redefine the future landscape of U.S. residential construction.
Fierce Controversy Over Lumber Tariffs: Home Builders vs. Lumber Coalition
It's all about lumber as the National Association of Home Builders (NAHB) and the U.S. Lumber Coalition are at loggerheads over what's fueling the U.S. housing market's woes.
Kelly Saberi, reporting for FOX Business from Chicago, revealed on Monday that the NAHB pins some blame on tariff uncertainties and soaring lumber prices. The current anti-dumping and anti-subsidy duty on imported Canadian softwood lumber amounts to 14.5%, with a potential hike later this year to approximately 35%.
Canada's softwood lumber dominates 85% of the U.S.'s lumber imports and accounts for almost a quarter of the nation's lumber supply, according to the NAHB.
Now, let's dig a little deeper into the heart of the matter. The NAHB desires fair trade agreements and domestic production expansion, but acknowledges that such progress is years away, requiring significant investment. In the meantime, they fear insufficient, costly lumber supplies could derail their ambitions for reliable and affordable building materials.
Conversely, the U.S. Lumber Coalition points to falling lumber prices, with the random lengths framing composite price plummeting 67% between May 2021 and April of this year. Despite a dramatic surge in new home prices by 21%, its executive director, Zoltan van Heyningen, highlights the true drivers of home unaffordability: regulatory costs, land costs, and home builder profitability rates.
According to Heyningen, lumber isn't the culprit here. He spoke to FOX Business, articulating his stance that lumber prices aren't the primary cause behind soaring home costs.
The U.S. Lumber Coalition has also chastised Canada, claiming its lumber industry takes advantage of unfair trade practices that have inflicted irreparable damage on U.S. lumber manufacturers, workers, and their community counterparts.
A Chicago-based lumber owner, John Kalabich, who helms Acme Lumber, shared with Saberi that the lumber duty on Canadian imports allowed him to maintain relatively stable prices over the past year. Moreover, he recounted hearing from contractors that demand for minor repairs and high-end construction projects has noticeably dwindled.
Last month saw a 2.1% decline in single-family housing starts, reaching a seasonally adjusted annual rate of 927,000 in April, according to the U.S. Census Bureau. Sales of new single-family homes in April amounted to a seasonally adjusted rate of 743,000, while sales of existing ones reached 3.63 million.
The unresolved dispute underscores the delicate interplay between trade policies, market trends, and the construction sector's reliance on imported materials. The fallout from potential tariff increases could significantly influence the future of the U.S. housing market. [Editor's note: For further insights, visit FOX Business.]
[*Evidence based on analysis of available data suggests that the primary disagreement between the NAHB and the U.S. Lumber Coalition revolves around the impact of tariffs on lumber prices, housing affordability, and the dependence on Canadian lumber. The NAHB argues that tariffs add costs and uncertainty, driving up home prices while limited domestic production capacity remains below full capacity. The U.S. Lumber Coalition, conversely, maintains that U.S. trade laws, when enforced, encourage domestic lumber production and help bolster home building. However, both parties acknowledge that market dynamics and growth in housing demand warrant careful consideration of trade policy to minimize industry disruptions and ensure affordable, reliable lumber supplies.]
- The National Association of Home Builders (NAHB) advocates for fair trade agreements and domestic production expansion in the manufacturing industry, recognizing the need for substantial investment to achieve these goals.
- The U.S. economy, particularly the construction sector, has a significant dependence on energy resources for various purposes such as providing power to manufacturing facilities and businesses.
- The U.S. Lumber Coalition emphasizes the significance of finance, pointing out that regulatory costs and land costs, rather than lumber prices, are the primary drivers contributing to the unaffordability of new homes.
