Trump’s New Tariff Skyrockets Lumber Cost

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July, 2018

Due to the new 20% Canadian lumber tariff set in place last year by President Trump, home builders are feeling pessimistic as lumber cost skyrockets. Since January 2017, the average new home costs an additional $9,000 strictly due to the expensive lumber tariff. How is this rise in lumber cost affecting the construction industry, and how are companies working to keep home prices low for buyers?

abstract photo of a stack of uneven wooden planks affected by lumber tariff

What tariff?

When President Trump imposed steel, aluminum, and lumber tariffs on the E.U., Canada, and Mexico, tensions began to run high. In response to the new restrictions and cost of steel and aluminum trade, Canada hit back with more and heavier tariffs to express the extent of their retaliation. The United States Commerce Department argued that Canadian companies were selling goods (especially lumber) into the United States at unfair prices. Essentially, the idea of imposing tariffs was to level the playing field for Americans. So the question is, has the mission been accomplished?

Our eyes are bigger than our…production

Home buyers are eager to keep building, keep improving, and keep investing. The sad fact is that the United States simply can’t keep up with the demand for lumber. Essentially, we rely on other countries to trade with us to keep up with the need. To put things in perspective, one third of dimensional framing lumber and all of red and white cedar shingles come from Canada. It’s inevitable that prices will rise as we try to keep up with this new tariff along with continuously rising demand.

a forklift holding a large pile of two-by-fours

How home builders are coping

With the lumber prices skyrocketing, it’s unavoidable that new home prices will skyrocket as well. Builders who have already quoted a cost are forced to eat their losses, and must overcharge the next batch of home buyers to compensate. Builders are seeing home buyers back out of buying decisions and must scramble to sell the land to another family. Basically, this tariff is not only hurting the home builders, but also the home buyers.

The only group of individuals benefiting from this tariff are American lumber suppliers. Finally, they feel as though they’re on a level playing field. Some builders feel as though giving American suppliers the monopoly is worth the cost they’re forced to lose or charge, while others are feeling frustrated by the sudden increase in cost regardless of the benefit for American lumber suppliers.

What are your thoughts?

This tariff is centralizing lumber supply, but restricting many builders and buyers at the same time. There are plenty of arguments for both sides of the tariff, whether the benefits outweigh the consequences and vice versa. For most people, tariffs are a confusing topic, and it’s okay to take your time and conduct research prior to forming a conclusive opinion on the matter.

Regardless of any political influence on the construction industry, J-Tech is here for you. Call us today to address any of your home improvement needs. There’s no time like the present to begin checking projects off your to-do list, so let’s get started!

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