Posted on 04/26/2017 5:25:18 AM PDT by reaganaut1
Commerce Secretary Wilbur Ross announced Monday that the Trump Administration will raise the cost of new single family homes in the U.S. as part of its promise to “make America great again.”
Mr. Ross didn’t put it quite that way. He said the Administration will impose a 20% tariff on softwood lumber imports from Canada, which total about $5 billion at year. But that’s a lot of lumber and the tariff will add an additional $1 billion in new costs for U.S. construction. Most of those costs will be added to the price of new American housing, not counting the higher costs that will come as U.S. producers raise their prices to match the competition and pad their bottom lines.
...
Yet while the cross-border haggling drags on, middle America is where the new lumber tariff will hit hardest. According to the National Association of Home Builders, 28% of U.S. softwood lumber purchases are Canadian imports and these are particularly important in the construction of single-family homes. Roughly 7% of the cost of an American home is the lumber and that cost is already up, on average, by some $3,000 this year. The Journal reports that “builders say lumber costs are already at the highest in a decade.” Labor shortages in construction, thanks in part to restrictions on immigration, are also pushing up costs.
With his announcement last week on steel and this week’s lumber action, Mr. Trump’s trade policy is coming into focus. He’ll use tariffs to restrict imports and appease domestic producers that have the best trade lawyers and lobbyists, while hoping consumers don’t notice the higher prices. Mr. Trump made it to the White House with the support of middle-class voters still yearning for the American dream.
(Excerpt) Read more at wsj.com ...
Words are not deeds. Unfortunately, a look at the Reagan record leads to the question: With free traders like this, who needs protectionists? Consider that the administration has done the following:
-- Forced Japan to accept restraints on auto exports. The agreement set total Japanese auto exports at 1.68 million vehicles in 1981-82, 8 percent below 1980 exports. Two years later the level was permitted to rise to 1.85 million.(33) Clifford Winston of the Brookings Institution found that the import limits have actually cost jobs in the U.S. auto industry by making it possible for the sheltered American automakers to raise prices and limit production. In 1984, Winston writes in Blind Intersection? Policy and the Automobile Industry, 32,000 jobs were lost, U.S. production fell by 300,000 units, and profits for U.S. firms increased $8.9 billion. The quotas have also made the Japanese firms potentially more formidable rivals because they have begun building assembly plants in the United States.(34) They also shifted production to larger cars, introducing to American firms competition they did not have before the quotas were created. In 1984, it was estimated that higher prices for domestic and imported cars cost consumers $2.2 billion a year.(35) At the height of the dollar's exchange rate with the yen in 1984-85, the quotas were costing American consumers the equivalent of $11 billion a year.(36)
-- Tightened up considerably the quotas on imported sugar. Imports fell from an annual average of 4.85 million tons in 1979-81 to an annual average of 2.86 million tons in 1982-86. Not only did this continued practice force Americans to spend more than other consumers for sugar, but it created hardships for Latin American countries and the Philippines, which depend on sugar exports for economic development. The quota program undermined President Reagan's Caribbean Basin Initiative and intensified the international debt crisis.(37)
-- Negotiated to increase restrictiveness of the Multifiber Arrangement and extended restrictions to previously unrestricted textiles. The administration unilaterally changed the rule of origin in order to restrict textile and apparel imports further and imposed a special ceiling on textiles from the People's Republic of China.(38) Finally, it pressured Hong Kong, Taiwan, and South Korea, the largest exporters of textiles and apparel to the United States, into highly restrictive bilateral agreements. All told, textile and apparel restrictions cost Americans more than $20 billion a year.(39) The Reagan administration has stated several times that textile and apparel imports should grow no faster than the domestic market.(40)
-- Required 18 countries--including Brazil, Spain, South Korea, Japan, Mexico, South Africa, Finland, and Australia, as well as the European Community--to accept "voluntary restraint agreements" to reduce steel imports, guaranteeing domestic producers a share of the American market. When 3 countries not included in the 18--Canada, Sweden, and Taiwan-- increased steel exports to the United States, the administration demanded talks to check the increase. The administration also imposed tariffs and quotas on specialty steel. These policies, with their resulting shortages, have severely squeezed American steel-using firms, making them less competitive in world markets and eliminating more than 52,000 jobs.(41)
-- Imposed a five-year duty, beginning at 45 percent, on Japanese motorcycles for the benefit of Harley Davidson, which admitted that superior Japanese management was the cause of its problems.(42)
-- Raised tariffs on Canadian lumber and cedar shingles.
-- Forced the Japanese into an agreement to control the price of computer memory-chip exports and increase Japanese purchases of American-made chips. When the agreement was allegedly broken, the administration imposed a 100 percent tariff on $300 million worth of electronics goods. This episode teaches a classic lesson in how protectionism comes back to haunt a country's producers. The quotas established as a result of the agreement have created a severe shortage of memory chips and higher prices for American computer makers, putting them at a disadvantage with foreign competitors. Only two American firms are still making these chips, accounting for a small percentage of the world market.(43)
-- Removed Third World countries from the duty-free import program for developing nations on several occasions. -- Pressed Japan to force its automakers to buy more American-made parts.(44)
-- Demanded that Taiwan, West Germany, Japan, and Switzerland restrain their exports of machine tools, with some
market shares rolled back to 1981 levels. Other countries were warned not to increase their shares of the U.S. market.
-- Accused the Japanese of dumping roller bearings, because the price did not rise to cover a fall in the value of the yen. The U.S. Customs Service was ordered to collect duties equal to the so-called dumping margins.(45)
-- Accused the Japanese of dumping forklift trucks and color picture tubes.(46)
-- Failed to ask Congress to end the ban on the export of Alaskan oil and of timber cut from federal lands, a measure that could substantially increase U.S. exports to Japan.
-- Redefined "dumping" in order "to make it easier to bring charges of unfair trade practices against certain competitors."(47)
-- Beefed up the Export-Import Bank, an institution dedicated to promoting the exports of a handful of large companies at the expense of everyone else.(48)
-- Extended quotas on imported clothespins.
My daughter and her husband bought a new, expensive home 3 years ago. They’ve been complaining ever since that it’s a piece of crap and there is a lawsuit against the builder.
All their new, double paned, argon gas windows fog up and get water all over the inside which causes mold and mildew in the tracks. None of them were sealed properly. There are other things but that’s the one that bugs her most.
Destroy the American lumber industry thus lowering compitition, has what effect on prices? Unleash American lumber.
The tariff battle isn’t simple. If you raise tariffs on one country because they have unfair tariffs on our products it might even the field, but it results in higher cost for we who buy their products. Some business rely on low cost materials to compete with other businesses.
If the end game is to get the other guy to lower their inordinately high tariffs on our products by threatening tariffs on their products that would be a good long term result. But it takes time and stubbornness.
Trump looks to be just the kind of person you want making these moves because he’s business savvy and he has what’s best for the US as his bottom line.
interests
I watched the presser, Wilbur was right on every point. I was very impressed.
This is a stupid position for WSJ to take, “Housing Tax”. That’s a lie of omission. So they are fake news too.
Deport all the illegals and we wouldn’t need so many new homes and wouldn’t need to import lumber.
Canada has government money to subsidize lumber because we spend big dollars defending them and the free world. If they had to spend the same percentage on defense we do they couldn’t afford the subsidy.
This is horse hocky. Timber prices have been way low for years. Now people are building, the mills need timber. I want timber prices to rise a bit.
Is it ok for Canada to hurt US jobs by subsidizing soft wood production then dumping it into the US?
A lot of people I’ve seen frame houses (developments mostly)ARE on drugs. You’d be amazed.
So do you help the middle class by shipping jobs overseas?
Who needs tile and marble. Give me laminate and vinyl any day. I don’t have the time nor inclination to scrub grout lines.
It’s a shame how stone counter tops have destroyed the land. All the mining. I watched a monolith of granite cut down to nothing in the past few years. Such a damned shame that I drive another road just to not see it. That’s just one mountain of stone gone so I know there are thousands of others that have been leveled.
I'm stating a fact, not making a judgment call. Any tariff will result in winners and losers.
Those are annualized numbers, at that rate you would see about $800 per house.
Sweet!
I don’t see any middle class housing being built. New homes are outrageous in price and most lack quality even though they look pretty.
Since the US dollar is blitzing the Canadian dollar, I wonder if the 20% tariff is just offset...
Wilbur was right, anyone who has built a home knows the framing lumber is a very small part of the total cost of a house. I kept track when we built ours.
The more expensive the lumber, the fewer new builds, additions, remodels and repairs we will have done for our homes.
That means the fewer home construction jobs we will have.
The Never Yrump express continues to try and undermine him
Maybe with this leveling of the playing field American lumber companies can get we done
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