Posted on 08/02/2017 9:34:37 AM PDT by Eric Pode of Croydon
Back in April, President Trump slapped tariffs of around 20 percent on the Canadian softwood lumber industry. At the time, I wrote that it would cause lumber prices to rise, citing estimates that prices could increase by around 6.4 percent. Well, it turns out I was wrong, and lumber prices have not risen by around 6 or 7 percent. Instead, they’ve risen by much more since the spring—as much as 25 percent.
One contributing factor for this spike is not hard to see. Tariffs are taxes on the consumer, restricting the consumer’s options when purchasing a product. The levies make imported lumber more expensive, thus making American lumber a more attractive prospect for reasons not necessarily related to its quality or ease of procurement. It is not surprising that politically well-connected American companies, such as the U.S. Lumber Coalition, were strongly supportive of the import taxes. American lumber companies benefit, but at the expense of American lumber consumers that use the product as an input.
This price spike is occurring as the housing market is suffering. Materials needed to build new homes are becoming more expensive, and as a result, the production costs for homebuilders are increasing. This is resulting in a mismatch between sellers and buyers of homes: there is plenty of demand for new, inexpensive homes, but homebuilders cannot make a profit off homes at the prices that buyers can afford. Buyers want cheap homes, and, thanks in part to high lumber tariffs, homebuilders are less able to provide them.
The result of this has been plummeting confidence among homebuilders. The National Association of Home Builders’ confidence index has fallen to an eight-month low as home builders face higher supply costs. While builder confidence jumped following the election as President Trump promised lower taxes on corporations and reductions in regulations surrounding homebuilding, compliance with which makes up as much as a quarter of the cost of building a home. While builder confidence still remains high when compared to, for example, the rock-bottom lows of 2008, this recent drop highlights the administration’s habit of balancing policies that help businesses and consumers with trade policies that shoot American consumers in the foot.
As my colleague Brandon Arnold rightly pointed out at the time the tariffs were introduced, there are reasons for taxpayers to be concerned even if they do not plan to buy a home in the near future. President Trump has been teasing a plan to use $200 billion of taxpayer dollars to leverage $1 trillion in infrastructure investment. Yet with rising lumber prices causing construction costs to increase significantly, any infrastructure plan will get less bang for its buck. So will we see less “bang” or more “buck”? In other words, will Congress fund fewer projects for the same amount of money, or will it fund the same number of projects and spend more money? Either way, taxpayers lose.
The lesson here is not limited to lumber. Tariffs are, by their very nature, financial costs added to the myriad burdens faced by American businesses and consumers at large. As economists continue to overwhelmingly agree, international trade provides a net benefit to both countries that engage in it. Meanwhile, tariffs benefit small, politically favored industries at the expense of American businesses and consumers writ large. The country should seek to repair its damaged trade relationship with Canada and focus on lowering trade barriers, not erecting them.
You are not to inquire how your trade may be increased, nor how you are to become a great and powerful people, but how your liberties can be secured; for liberty ought to be the direct end of your Government.
Is there a conflict between liberty and someone's job, or someone's business model? Liberty should prevail.
Is there a conflict between liberty and the nation's world prestige or power? Liberty should prevail.
Liberty, liberty, liberty above all.
Only 3.2% of forestry jobs are unionized according to the BLS.
Tax cuts that benefit a politically connected business at the expense of others are corrupt filth.
i don’t see problem with Canuck supplies of softwood products.
After all they are now socialists who are undercutting the market price to their long term detriment,
“Thanks, but I don’t claim credit for any genius here.”
There isn’t any genius. Idiots always think they have outsmarted everyone else, including those that think cheap foreign products are somehow good for everyone else. because they like them.
This is NOT a global economy. Never will be. Every nation has laws, regulations, and economic pressures the other nations do not.
You’re just a cheapskate willing to screw your fellow Americans because he wants cheap products.
There is no conflict between internal liberty and softwood tariffs.
This nation funded itself for the first 100 years on tariff and Whiskey taxes.
BHNF has tons of acreage that have been thinned...
And let’s cut our regulations so we can be more competitive. I’m for that.
The Whiskey taxes driving the Rebellion were soon retired....
The Whiskey taxes driving the Rebellion were soon retired....
I favor tariffs for manufactured goods, but not agricultural products or raw materials.
I, for one, appreciate wifi/ethernet over power lines in the home.
China rulz in this case.
Eric, no American can be opposed to a tax cut that brings in 10s of thousands of manufacturing jobs and with that the accompanying job multiplier affect. The revenues will increase. You are not only a traitor but also a hypocrite. A loser - loser situation.
So you've dropped the "lower taxes" from your globalist sloganeering.
Indirectly this will help hunters too, deer numbers have been in decline in a lot of areas due to the steep drop in clear and partial cut areas which regrows initially with a lot of their preferred forage. Pops said it was a serious issue back in VA up in the mountains on national forest areas.
Time for a new tagline.
No, it is not. Tariffs cause both.
When you make things cost more, you reduce the amount of that thing that is bought. Then less is produced, and fewer employees are needed to produce and sell it.
It’s not as if we can just automatically and immediately ramp up.
Or maybe this one.
Those were the days when you did not want to buy a car built on a Monday or a Friday, or any day in between when the guys snuck in a few six packs while the shop steward looked the other way.
A great Amount poplar wood is being shipped from the U.S. to China for furniture manufacturing. I know this because I used to use Poplar almost exclusively in the work I do in regards to custom kitchen remodeling. The Poplar supply dried up now I use fir.
The lumber supplier that I have used for over 20 years specializes in various species and also performs extensive millwork he told me that a lot of the woods that we used to find here on our shores is all being shipped over to China instead.
So it is not an accurate assessment in assigning blame to Canada exclusively. America harvests a lot of wood but most of it is in fact going to China. We’re cutting our own throats! Canada aside, we could get on just fine using our own lumber resources right here in the United States but we don’t.
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