US Lumber Tariff Hikes Have Industry on Edge

Just before the Thanksgiving holiday, the US decided to almost double the duties on Canadian softwood lumber from most producers to 17.9%. The current rate for most companies is about 9%.

The move not surprisingly upset Canada, where the softwood lumber industry contributed more than $25 billion to the nation’s gross domestic product in 2020, according to Reuters.

It also riled up US groups such as the National Association of Homebuilders (NAHB), whose chairman, Chuck Fowke, said the move will only exacerbate market volatility, put upward pressure on lumber prices and make housing more expensive.

“This decision undermines the historic funding commitment made to housing in the Build Back Better legislation and erodes efforts by Commerce Secretary Raimondo and other Biden administration officials to tackle the lumber and building materials supply issues plaguing the industry,” he said in prepared remarks.

As If Supply Chain ‘Challenges’ Aren’t Enough

Fowke is not alone in his views. Adrian Washington, CEO & Founder Neighborhood Development Company, tells GlobeSt that the US building industry is already challenged by supply chain bottlenecks, labor shortages and Covid safety labor protocols. “Anything added on top of this, like increasing tariffs on a critical building material, will increase costs and reduce supplies at the worst possible time.”

In another twist to this complicated subject, Market Research Journals reported that, according to the United States, subsidized Canadian lumber producers are dumping their products into the United States at a lower price than American lumber producers can because of the subsidies they receive. 

“As a result, the United States imposes a tariff on all softwood lumber imported from Canada in order to raise its retail price, which encourages consumers to purchase American wood,” it wrote.

US is World’s Top Canadian Customer

Canadian softwood lumber exports to the rest of the world total about $8 billion per year, according to government data. The United States is the world’s largest purchaser of it.

According to official data, the United States only produces enough softwood lumber to meet about 70% of its own demand. Most of the rest of the supplies are shipped from Canada.

Samir Patel, a CIBC analyst, estimates that for every thousand feet of softwood lumber Canada exports to the United States, an additional $99 in tariffs will be tacked on. That’s an increase from the current $54 price, CBC reported.