In 2016, towards the end of the Obama administration, the US lumber industry asked the government to impose duties on Canadian softwood lumber imports in response to what it claimed were unfair trade practices. The measures have continued under the Trump administration, which in 2017 imposed a 20.2% tariff on most Canadian producers. The rate was lowered to 9 percent last year.
The situation of protracted conflict has gained new urgency as the price of wood has risen over the past year. The National Association of Home Builders estimated in April that rising timber costs have added Almost $360006000 Average price of a newly built single family home. Benchmark lumber framing price hit a record high of $1,515 per 1,000 slab feet in May, four times the price at the start of 2020, before it began falling. Last week, the price settled at $930, more than double its level at the start of 2020, according to Fastmarkets Random Lengths, the trade publication that publishes the index.
“As an economist, it’s very hard to understand why we tax something we don’t produce enough,” said Robert Dietz, chief economist at the National Association of Home Builders.
On the other side of the issue are the lumber producers in the United States. The American Timber Alliance, an industry group, has argued that strong demand, not fees, is driving lumber prices and that fees make up only a small portion of the total cost of lumber for new homes.
The alliance credits the fee for boosting the US sawmill industry, saying in a statement that US sawmills have expanded capacity in recent years, producing an additional 11 billion feet of lumber since 2016. “More lumber is being manufactured in America to meet demand Domestication is a direct result of the imposition of trade, and US industry strongly urges the administration to continue this application,” the coalition said.
Dustin Galbert, chief economist at Fastmarkets, a price reporting firm, has attributed the chaotic sawn timber market and soaring prices largely to the effects of the pandemic. At the start of the epidemic, he said, sawmills were “assuming the worst” and curtailed production, only for the housing market to recover and demand increased.
Mr. Galbert said the fees arising from the dispute between the United States and Canada were not a major reason for the price hike. “In terms of the short-term pricing situation, it’s at the bottom of the list in terms of factors driving the benchmark prices we’ve seen in the market,” he said.