May 25th, 2021
Change the Thermostat All You Want, Someone Will Always Be Unhappy
For 15 years now, it seems, I’ve had a file on my desk labeled “Softwood Lumber.” Well, maybe not a crinkled up, over-stuffed, physical folder, but at least a collection of digital files and research. I say, “it seems,” because I’m speaking somewhat figuratively. Point being this topic has been part of my life and work for that long now and—figurative or not—I’m not exaggerating. Fifteen years ago, this is something that was covered largely by trade journalists; today, you’d be hard pressed to find a single news source that isn’t writing about lumber. I’m convinced that 15 years from now I’ll still be writing about it.
In recent months, I’m constantly amazed not only by how volatile lumber prices are, but by how rapidly the topic is evolving. Case in point: Friday, I gathered all of the latest developments into that big, fat folder in order to write an update—mostly about the latest efforts to press the Biden Administration into action. I wrote my story, then logged off for the weekend. Monday morning, I returned to a rash of messages and new developments. Reading through those developments, I felt like rubbing my eyes. It was two days. And the weekend! How could anything have changed? But, as it turns out, I don’t think Chuck Fowke, chairperson for the National Association of Home Builders (NAHB), spent his weekend by the pool. If he did, I’m not so sure that he spent it splashing around and relaxing—not after he caught wind of the fact that the U.S. Department of Commerce wrapped up a preliminary determination and Canada’s Minister of Small Business, Export Promotion and International Trade, Mary Ng, said she could see a significant increase on the horizon for tariffs.
I’m editorializing here, but—after tariffs were raised to 20.8% in 2017, then dropped back to 9% last December, and now with Ng suggesting they could increase back to nearly 20% later this year, are trade officials treating lumber tariffs a bit like a thermostat?
When tariffs dropped last December, officials for NAHB warmed up, praising the move. Others complained that it was still cold—including officials for the U.S. Lumber Coalition, which said that the move only confirmed that Canadian softwood lumber is heavily subsidized and dumped into the U.S. market. With the latest suggestion that tariffs could be heading back up again, already NAHB’s temperature is back up. The mere suggestion of it, “shows the White House does not care about the plight of American home buyers and renters who have been forced to pay much higher costs for housing,” Fowke said, adding, “This action clearly shows the White House is disingenuous when it claims the nation’s housing affordability crisis must be an important priority. This move certainly demonstrates a lack of courage to stand up to the U.S. lumber lobby that is already reaping record profits off the backs of hardworking American families.”
Ouch. That’s hot to the touch.
Meanwhile, U.S. Lumber Coalition officials question NAHB’s math and perspective.
“Homebuilders argue that home prices – new and existing – are rising because the duty on subsidized imports from Canada. This is false,” the Coalition writes in a recent statement. “While it is true that demand-driven rising lumber prices have increased the cost of lumber in a newly built home, The National Association of Homebuilders (NAHB) triples the correct estimate of that cost by including plywood, OSB, delivery costs, and so on. These non-lumber products, which together are much more costly than lumber, are not made by sawmills and are not subject to import measures; they belong to a different industry.”
Not to instigate, but this is beginning to sound like a boxing match between representatives of builders and domestic lumber producers. For those of us looking on, I think it’s important to remember that behind arguments about tariffs and legitimate complaints over the cost of materials are two inextricable shortages: lumber and housing. By that token, it seems we find ourselves in a bit of a pickle.
According to the statistics I’ve seen, domestic lumber producers can’t even come close to producing enough lumber to build the number of houses needed here in the U.S. In the meantime, with lumber prices up more than 300 percent from a year ago, if (and that remains an if) Commerce decides to once again double down on tariffs, that will further exacerbate the nation’s affordability crisis for housing, Fowke suggests. That stands to reason. But for now, it seems, we could see the thermostat go up and down yet, as they continue searching for the right temperature. Will it help or will it hurt? I guess only time will tell. Or, maybe it already has.