Ok, you played the old switcheroo. You said the tariff will cost jobs in that production industry. Now you are saying the lumberjack is fine but the carpenter is not. You are all over the board and you see a boogyman everywhere you look.
The cost of lumber may inflate the price of a house by 1%. It my be slightly inflationary. It will not affect the demand for new houses.
No, that is not what I said.
Tariffs are taxes on goods. When you put a tax on the materials needed to produce goods, you raise the cost of producing those goods. That’s true of housing, cars, and any other production.
One of the primary rules of economics is that when you tax something, you get less of it. So when you tax lumber or any other commodity, you get less of that commodity. That means there is less material for all the uses to which we put that commodity, such as construction. That means lower sales, which means fewer jobs in that industry, and fewer jobs serving that industry.
We reject protection of industries domestically. But we’re supposed to embrace it internationally?
Bringing in less lumber also reduces dock jobs.
And, of course, other countries can be expected to retaliate, which inflicts further damage on our economy.
That’s why I said that tariffs may be effective as foreign policy, but they’re bad economic policy.
What the article fails to mention is that we had a duty/tariff agreement with Canada for ten years that expired in October of 2015. The US imposed a preliminary duty of an average of 20% this year. There was also imposed a preliminary antidumping tariff of 10%.
There was a period of over one year that the Canadians shipped duty free into the US. That plus a favorable exchange rate due primarily to the price of crude oil made the best return to the Canadian sawmill to ship their product to the US. Therefore, their shipments increased during that “duty free” period.
When the price of oil(Canada is a net exporter of oil and it greatly effects their exchange rate) was high and the Canadian dollar was higher in relation to the US dollar their exports to the US were lower.
There has also been an increase in demand for lumber from almost all US consumers. For example, some of the wood truss manufactures I personally sell are having their best year ever currently. If they are not having their best year, it is the best demand they have had in 10-20 years. However, all demand is local. The market may be booming in Utah, but may only be OK in NY state.
This combination of factors plus regional demand increase has caused Douglas Fir dimension to be trading at all time record highs. However, Southern Yellow Pine is actually down from the prices it reached last year. The fires just recently in interior British Colombia have also caused a shot tem spike. However, that has now run its course.
All we need now is a hurricane and lumber, plywood and osb will really go nuts.