In 2016, towards the tip of the Obama administration, the American lumber trade petitioned the federal government to impose duties on Canadian softwood lumber imports in response to what it contended had been unfair commerce practices. The proceedings continued underneath the Trump administration, which in 2017 imposed duties of 20.2 % for many Canadian producers. The speed was lowered to 9 % final 12 months.
The standing of the long-running dispute took on a brand new urgency as the worth of lumber soared over the previous 12 months. The Nationwide Affiliation of Residence Builders estimated in April that greater lumber prices had added nearly $36,000 to the worth of a median newly constructed single-family dwelling. A benchmark for the worth of framing lumber set a report excessive of $1,515 per thousand board ft in Could, 4 instances the worth originally of 2020, earlier than starting to plummet. Final week, the worth stood at $930, nonetheless greater than double its stage in the beginning of 2020, in response to Fastmarkets Random Lengths, the commerce publication that publishes the benchmark.
“As an economist, it is vitally onerous to grasp why we’re taxing one thing we don’t produce sufficient of,” mentioned Robert Dietz, the chief economist for the Nationwide Affiliation of Residence Builders.
On the opposite aspect of the difficulty are U.S. lumber producers. The U.S. Lumber Coalition, an trade group, has argued that robust demand, not duties, is driving lumber costs and that the duties make up solely a small portion of the overall value of lumber for brand new houses.
The coalition credit the duties with strengthening the U.S. lumber trade, saying in a press release that American sawmills had expanded capability in recent times, producing a further 11 billion board ft of lumber since 2016. “Extra lumber being manufactured in America to fulfill home demand is a direct results of the commerce enforcement, and the U.S. trade strongly urges the administration to proceed this enforcement,” the coalition mentioned.
Dustin Jalbert, a senior economist at Fastmarkets, a worth reporting agency, attributed the chaotic lumber market and excessive costs largely to results from the pandemic. Initially of the pandemic, he mentioned, sawmills “assumed the worst” and curbed manufacturing, just for the housing market to rebound and for demand to soar.
Mr. Jalbert mentioned the duties stemming from the U.S.-Canada dispute weren’t a significant motive for the excessive costs. “By way of the short-term pricing scenario, it’s decrease down the record by way of the elements which might be driving the report costs that we’ve seen available in the market,” he mentioned.