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 below the Trump administration, which in 2017 imposed duties of 20.2 p.c for many Canadian producers. The speed was lowered to 9 p.c final yr.
The standing of the long-running dispute took on a brand new urgency as the value of lumber soared over the previous yr. The Nationwide Affiliation of House Builders estimated in April that larger lumber prices had added nearly $36,000 to the value of a median newly constructed single-family residence. A benchmark for the value of framing lumber set a report excessive of $1,515 per thousand board toes in Could, 4 instances the value at the start of 2020, earlier than starting to plummet. Final week, the value stood at $930, nonetheless greater than double its degree initially of 2020, in accordance with Fastmarkets Random Lengths, the commerce publication that publishes the benchmark.
“As an economist, it is vitally laborious 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 House 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 entire price of lumber for brand new properties.
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 toes of lumber since 2016. “Extra lumber being manufactured in America to satisfy 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 value reporting agency, attributed the chaotic lumber market and excessive costs largely to results from the pandemic. In the beginning 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 purpose for the excessive costs. “By way of the short-term pricing scenario, it’s decrease down the listing when it comes to the components which can be driving the report costs that we’ve seen available in the market,” he mentioned.