Trump’s New Housing Tax: A tariff on Canadian lumber will raise the cost of U.S. homes.

[SirLinksALot]

SOURCE: WALL STREET JOURNAL

URL: https://www.wsj.com/articles/trumps-new-housing-tax-1493159499


Commerce Secretary Wilbur Ross announced Monday that the Trump Administration will raise the cost of new single family homes in the U.S. as part of its promise to “make America great again.”

Mr. Ross didn’t put it quite that way. He said the Administration will impose a 20% tariff on softwood lumber imports from Canada, a country they accuse of subsidizing their lumber industry, which total about $5 billion at year. But that’s a lot of lumber and the tariff will add an additional $1 billion in new costs for U.S. construction. Most of those costs will be added to the price of new American housing, not counting the higher costs that will come as U.S. producers raise their prices to match the competition and pad their bottom lines.

... [SNIP]

Yet while the cross-border haggling drags on, middle America is where the new lumber tariff will hit hardest. According to the National Association of Home Builders, 28% of U.S. softwood lumber purchases are Canadian imports and these are particularly important in the construction of single-family homes. Roughly 7% of the cost of an American home is the lumber and that cost is already up, on average, by some $3,000 this year. The Journal reports that “builders say lumber costs are already at the highest in a decade.” Labor shortages in construction, thanks in part to restrictions on immigration, are also pushing up costs.

With his announcement last week on steel and this week’s lumber action, Mr. Trump’s trade policy is coming into focus. He’ll use tariffs to restrict imports and appease domestic producers that have the best trade lawyers and lobbyists, while hoping consumers don’t notice the higher prices. Mr. Trump made it to the White House with the support of middle-class voters still yearning for the American dream.

(Excerpt) Read more at the above link

[mirraflake]

WSJ is pro globalisation so I would like to read a competing view before making up my mind.

[Sanguine]

Yes, that's what tariffs do.

[mirraflake]

Yes, that's what tariffs do.

If Canada is wiping out our own wood industry by subsidizing theirs something needs to be done. I believe GWB did the tariff against Canada back in 2003 for 30%.

@Sanguine

[Sanguine]

If Canada is wiping out our own wood industry by subsidizing theirs something needs to be done. I believe GWB did the tariff against Canada back in 2003 for 30%.

@Sanguine

I'm not saying the net effect will be good or bad; I don't know.  Just commenting on what tariffs do.

[Frank Cannon]

If we are going to trade with Socialist countries and not enforce agreements, then we may as well just shut down all of our manufacturing because we will not be able to compete with either their artificially low employment costs or material costs.

[skeeter]

WSJ is pro globalisation so I would like to read a competing view before making up my mind.

I'm not so sure its as cut and dried as the WSJ would like us to believe, since their interest is in corporate profitability and not so much what benefits the consumer.

I've long suspected material costs have very little to do with the sticker price of housing, at least where I live. Prices are set by what the market will bear, and those have long been much higher than the cost of wood, and even labor, for that matter.

Interestingly, at the same time the Canadian wood industry has been providing us all of this subsidized product the retail price of wood has been climbing at an increasing rate.

[mirraflake]

I've long suspected material costs have very little to do with the sticker price of housing, at least where I live. Prices are set by what the market will bear, and those have long been much higher than the cost of wood, and even labor, for that matter.

Houses are also being built with less wood every year. Lot's  plastic products, fake plastic deck board. Fancy front entrance doors made out of molded colorized plastic that you cannot tell is wood.

@skeeter

[skeeter]

Houses are also being built with less wood every year. Lot's  plastic products, fake plastic deck board. Fancy front entrance doors made out of molded colorized plastic that you cannot tell is wood.

@skeeter

And fewer large pieces of virgin wood in favor of Glulam, which is manufactured from two and three year old trees, & OSB, etc. Recycled stuff.

[mirraflake]

Usually what the WSJ recommends is usually bad for the American people.

[mirraflake]

And fewer large pieces of virgin wood in favor of Glulam, which is manufactured from two and three year old trees, & OSB, etc. Recycled stuff.

Lot of new home construction is metal studs. Not widespread yet but catching on.

BTW we are framing in a room  and I went to Lowes for 2x4's.  Out of every 10 or so I would find one decent one. Years back I remodeled the first house I owned that was built  in the 60's. The studs were near flawless. Ones today half the edges are gone.

@skeeter

[Cripplecreek]

Yes, that's what tariffs do.

At least Chuck Schumer has finally found common ground with Trump.

[skeeter]

Lot of new home construction is metal studs. Not widespread yet but catching on.

BTW we are framing in a room  and I went to Lowes for 2x4's.  Out of every 10 or so I would find one decent one. Years back I remodeled the first house I owned that was built  in the 60's. The studs were near flawless. Ones today half the edges are gone.

@skeeter

I'm glad metal studs haven't caught on in my area. Hate working around em.

I've noticed wood quality dropping, as well. Even in the lumber yards, where I went after becoming disgusted with the more affordable stuff at Home Depot.

BTW I'm working on a 1927 Bungalow and am absolutely amazed not only with the quality of materials, but quality of construction back then. Those guys were artists. Today's builders are hackers by comparison.

[endicom]

I've long suspected material costs have very little to do with the sticker price of housing, at least where I live. Prices are set by what the market will bear, and those have long been much higher than the cost of wood, and even labor, for that matter.

Location, location, location. You can afford that $10,000,000 Malibu home if it happens to be in rural Nebraska.

[endicom]

And fewer large pieces of virgin wood in favor of Glulam, which is manufactured from two and three year old trees, & OSB, etc. Recycled stuff.

I was shown blocks of compressed and 'compregnated' wood back in 1959. I think that plasticized wood would have become the norm if not for government regulations that happen to benefit certain industries or unions.

[truth_seeker]

A very longstanding trade dispute, predating Trump by a mere 35 years....

Per wiki:

"The Canada–U.S. softwood lumber dispute is one of the largest and most enduring trade disputes between both nations.[1] This conflict arose in 1982 and its effects are still seen today. British Columbia, the major Canadian exporter of softwood lumber to the United States, was most affected, reporting losses of 9,494 direct and indirect jobs between 2004 and 2009.[2]

The heart of the dispute is the claim that the Canadian lumber industry is unfairly subsidized by federal and provincial governments, as most timber in Canada is owned by the provincial governments. The prices charged to harvest the timber (stumpage fee) are set administratively, rather than through the competitive marketplace, the norm in the United States. In the United States, softwood lumber lots are privately owned, and the owners form an effective political lobby. The United States claims that the Canadian arrangement constitutes an unfair subsidy, and is thus subject to U.S. trade remedy laws, where foreign trade benefiting from subsidies can be subject to a countervailing duty tariff, to offset the subsidy and bring the price of the commodity back up to market rates.

The Canadian government and lumber industry dispute this assertion, based on a number of factors, including that Canadian timber is provided to such a wide range of industries, and that lack of specificity makes it ineligible to be considered a subsidy under U.S. law. Under U.S. trade remedy law, a countervailable subsidy must be specific to a particular industry. This requirement precludes imposition of countervailing duties on government programs, such as roads, that are meant to benefit a broad array of interests. Since 1982, there have been four major iterations of the dispute."

https://en.wikipedia.org/wiki/Canada%E2%80%93United_States_softwood_lumber_dispute

[Sanguine]

A very longstanding trade dispute, predating Trump by a mere 35 years....

Per wiki:

"The Canada–U.S. softwood lumber dispute is one of the largest and most enduring trade disputes between both nations.[1] This conflict arose in 1982 and its effects are still seen today. British Columbia, the major Canadian exporter of softwood lumber to the United States, was most affected, reporting losses of 9,494 direct and indirect jobs between 2004 and 2009.[2]

The heart of the dispute is the claim that the Canadian lumber industry is unfairly subsidized by federal and provincial governments, as most timber in Canada is owned by the provincial governments. The prices charged to harvest the timber (stumpage fee) are set administratively, rather than through the competitive marketplace, the norm in the United States. In the United States, softwood lumber lots are privately owned, and the owners form an effective political lobby. The United States claims that the Canadian arrangement constitutes an unfair subsidy, and is thus subject to U.S. trade remedy laws, where foreign trade benefiting from subsidies can be subject to a countervailing duty tariff, to offset the subsidy and bring the price of the commodity back up to market rates.

The Canadian government and lumber industry dispute this assertion, based on a number of factors, including that Canadian timber is provided to such a wide range of industries, and that lack of specificity makes it ineligible to be considered a subsidy under U.S. law. Under U.S. trade remedy law, a countervailable subsidy must be specific to a particular industry. This requirement precludes imposition of countervailing duties on government programs, such as roads, that are meant to benefit a broad array of interests. Since 1982, there have been four major iterations of the dispute."

https://en.wikipedia.org/wiki/Canada%E2%80%93United_States_softwood_lumber_dispute

That's the way I understand it.

But, keep in mind that whenever you add costs to a commodity, someone has to pay those extra costs.  And, guess who that "someone" is?

[Idaho_Cowboy]

We could use our own trees instead of letting them burn every summer.

[truth_seeker]

That's the way I understand it.

But, keep in mind that whenever you add costs to a commodity, someone has to pay those extra costs.  And, guess who that "someone" is?

However a) Canada can reduce the prices, or b) Different suppliers (instead of Canada) can be utilized, Sweden, Finland, Russia, etc. c) Purchase more from US suppliers instead.

It would not be the first example of shifting suppliers.

[mirraflake]

BTW I'm working on a 1927 Bungalow and am absolutely amazed not only with the quality of materials, but quality of construction back then. Those guys were artists. Today's builders are hackers by comparison.

My parents first house house was built in 1948. The base floor was  thick hardwood, tongue and groove machine  planed boards about 6" wide or so and they were installed diagonally and they then installed 1" stained hardwood floors over that. You jump up and down on the floor and it was like jumping on concrete.

We are in the process of selling the house I built in 1994. I tried to use the best materials at the time and took great care of it. Have a crew doing tile work etc Replacing all the doors because the bottoms door frames are all rotted out and I painted the frames every 2-3 years.

The guy who is doing all the work said the homes built in the 80's on up  will last about 50-60 years. and then be torn down..disposable.
@skeeter

[truth_seeker]

Oh yeah. Who was President in 1982, when this conflict first arose?

Clue: Not Trump.

[endicom]

The guy who is doing all the work said the homes built in the 80's on up  will last about 50-60 years. and then be torn down..disposable.

Maybe, but the same was said of the homes built during the booms of the 1950s and 1960s.

[geronl]

The US lost a case against Mexico and will lose this one too

[skeeter]

Maybe, but the same was said of the homes built during the booms of the 1950s and 1960s.

My folks track home, built in '58, is holding up pretty well, with minimum of maintenance. But of course in California weather.

[geronl]

Oh yeah. Who was President in 1982, when this conflict first arose?

Clue: Not Trump.

Wilbur Ross is working for who? This is a present-tense story, it's not about 1982

[mirraflake]

Maybe, but the same was said of the homes built during the booms of the 1950s and 1960s.

Yeah but the building materials of those 50's and 60's homes were superior, thicker woods and much of it was hardwoods versus today's soft pine. . Today all all homes are built primarily of cheap OSB particle board-floor, roof and siding (under vinyl or brick).

The cheaper tract homes built in the 50's make todays homes look like cardboard construction.

@endicom
@skeeter

[driftdiver]

Lot of new home construction is metal studs. Not widespread yet but catching on.

BTW we are framing in a room  and I went to Lowes for 2x4's.  Out of every 10 or so I would find one decent one. Years back I remodeled the first house I owned that was built  in the 60's. The studs were near flawless. Ones today half the edges are gone.

@skeeter

@mirraflake
You have to buy the higher grade 2x4s to get ones that are semi-straight and are usable for framing.    They typically cost about a buck more each.

[Smokin Joe]

We could use our own trees instead of letting them burn every summer.

But then the poor widdle spotted owls won't have any place to go (yep, that was sarcasm).

[Idaho_Cowboy]

But then the poor widdle spotted owls won't have any place to go (yep, that was sarcasm).

They used to live in Kmart signs, but now that Kmart is in trouble I'm worried about the owls.  ^-^

[Smokin Joe]

They used to live in Kmart signs, but now that Kmart is in trouble I'm worried about the owls.  ^-^

Well, there could be a cottage industry in cutting the signs down...but it will never replace the lumber mills shut down by a government infatuated with an owl only separated from the Southern Spotted Owl by address. (The Spotted Owls can breed and produce viable offspring, no matter where they live)

[roamer_1]

BTW we are framing in a room  and I went to Lowes for 2x4's.  Out of every 10 or so I would find one decent one. Years back I remodeled the first house I owned that was built  in the 60's. The studs were near flawless. Ones today half the edges are gone.

Go to an actual building center instead of a big-box store and your experience will be different.
I *never* buy wood products at home depot or lowes.

[roamer_1]

We are in the process of selling the house I built in 1994. I tried to use the best materials at the time and took great care of it. Have a crew doing tile work etc Replacing all the doors because the bottoms door frames are all rotted out and I painted the frames every 2-3 years.

It doesn't matter how many times you painted it. If you didn't back-prime and paint the end grain of the frame before it was installed, it will fail. That is why it is rotting out... Although here they don't rot out generally... here they dessicate and crack because the moisture is leaving through the backside of the frame due to our low humidity,

[Forum member]

We could use our own trees instead of letting them burn every summer.

Around here the bumper stickers say, "Can't mine it, can't graze it, can't log it... let it burn"

[Smokin Joe]

It doesn't matter how many times you painted it. If you didn't back-prime and paint the end grain of the frame before it was installed, it will fail. That is why it is rotting out... Although here they don't rot out generally... here they dessicate and crack because the moisture is leaving through the backside of the frame due to our low humidity,

We have the dessication problem, too. Old barn siding here is downright brittle.

[Smokin Joe]

Around here the bumper stickers say, "Can't mine it, can't graze it, can't log it... let it burn"

Around here it's "Earth First! (We'll drill the other planets later)"

[roamer_1]

We have the dessication problem, too. Old barn siding here is downright brittle.

That is why the backprime is so critical - it's the only time any sort of coating will be applied, ever.

We routinely rejected door frames whose aluminum threshold was permanently affixed, or informed the contractor and got a waiver - If we can't take the threshold off and coat that all important end grain, there is no way we can guarantee the work at all.

We wouldn't even do the work for jippo operators who always wanted to save money by excluding the backprime. it saves them a mere 10 cents a linear or square foot (depending on the product) but makes the work wholly unwarrantable.

[GtHawk]

Lot of new home construction is metal studs. Not widespread yet but catching on.

BTW we are framing in a room  and I went to Lowes for 2x4's.  Out of every 10 or so I would find one decent one. Years back I remodeled the first house I owned that was built  in the 60's. The studs were near flawless. Ones today half the edges are gone.

@skeeter

What's really sad is dimensional lumber, especially if you have to replace wood in construction that is old enough to have true 2X4's. When my friend built his home he over built it using 3X4's and poured a foundation 50% thicker than code. I joke that because he is less than a mile from the ocean in Huntington Beach, Ca. he doesn't have to worry about the home breaking as much as it sinking due to liquefaction during an earthquake.

[roamer_1]

What's really sad is dimensional lumber, especially if you have to replace wood in construction that is old enough to have true 2X4's.

That really isn't a quality thing... The reason dimensional wood is undersized is because it is passed through a planer in order to true it's dimensions - something 2x rough-stock doesn't (didn't) receive. And I prefer the planed. Build one home out of rough-sawn and you will too.

[Smokin Joe]

That really isn't a quality thing... The reason dimensional wood is undersized is because it is passed through a planer in order to true it's dimensions - something 2x rough-stock doesn't (didn't) receive. And I prefer the planed. Build one home out of rough-sawn and you will too.

Well, If I was building from scratch here, all the exterior walls would be 2X6.

 In new construction, I would insulate the bejeebers out of it. When the wind changes in DC, there's a good chance the stupidity with energy use will start over again if safeguards aren't put in place to prevent that. That is something I just don't see happening, and all the rules and taxes will be written up by people who live where subzero weather is something they have heard of in National Geographic, but have never lived in.

[roamer_1]

Well, If I was building from scratch here, all the exterior walls would be 2X6.

 In new construction, I would insulate the bejeebers out of it. When the wind changes in DC, there's a good chance the stupidity with energy use will start over again if safeguards aren't put in place to prevent that. That is something I just don't see happening, and all the rules and taxes will be written up by people who live where subzero weather is something they have heard of in National Geographic, but have never lived in.

That's a fact. I am not cussing the thicker wall... I am just saying that dimensional lumber is far, far better to work with than rough-cut. That's all I mean. And the first time you have to size all the walls in  the house to get the sheet-rock to lay down (not to mention the siding), you'll be agreeing with me. Planed lumber is awesome.

[Smokin Joe]

That's a fact. I am not cussing the thicker wall... I am just saying that dimensional lumber is far, far better to work with than rough-cut. That's all I mean. And the first time you have to size all the walls in  the house to get the sheet-rock to lay down (not to mention the siding), you'll be agreeing with me. Planed lumber is awesome.

Oh, I know. I live in a 105 year old house. We had a fire, and the structure survived. You can't find a plasterer in the state, so it was stripped to studs on the fire floor, and the yayhoos who did the drywall didn't get it right. I'm still fixing on that. Most of the full dimension studs lined up quite well, and that is some amazing lumber. The grain is tighter (before farm trees), and the wood is more dense, too, but it is not as uniform as milled wood, and the couple of studs one of the demo crew tore out that should not have been removed were a pain to replace.

[roamer_1]

Oh, I know. I live in a 105 year old house. We had a fire, and the structure survived. You can't find a plasterer in the state, so it was stripped to studs on the fire floor, and the yayhoos who did the drywall didn't get it right. I'm still fixing on that. Most of the full dimension studs lined up quite well, and that is some amazing lumber. The grain is tighter (before farm trees), and the wood is more dense, too, but it is not as uniform as milled wood, and the couple of studs one of the demo crew tore out that should not have been removed were a pain to replace.

I got pretty good at that sort of thing,.. Built a rig for it out of some super straight D fir... Just have to get the ends in the same plane and set my rig on it, and run the router across the wall, dropping in 1/2" increments... makes for shorter work than firring out, or string and block plane... But it's still a whole load of work that isn't necessary if the carpenter is good and the wood is too.

We were still using rough-sawn up here until the woods closed down and all the jippo mills dried up. That's how I know the old way.

[GtHawk]

That really isn't a quality thing... The reason dimensional wood is undersized is because it is passed through a planer in order to true it's dimensions - something 2x rough-stock doesn't (didn't) receive. And I prefer the planed. Build one home out of rough-sawn and you will too.

Well yes and no, in the past a 2X4 was being 2X4 in. now it's closer to 1 5/8 X 3 5/8 so they start with a smaller piece and end with a smaller piece and if you pay the premium for kiln dried the finished dimension is tighter. That's what I found of years of picking thru Home Depot lumber stacks trying to come up with a usable quantity of just decent lumber that was usually so wet you still ended up with crap if you didn't have locked in place before it warped while drying.

[Idaho_Cowboy]

Well yes and no, in the past a 2X4 was being 2X4 in. now it's closer to 1 5/8 X 3 5/8 so they start with a smaller piece and end with a smaller piece and if you pay the premium for kiln dried the finished dimension is tighter. That's what I found of years of picking thru Home Depot lumber stacks trying to come up with a usable quantity of just decent lumber that was usually so wet you still ended up with crap if you didn't have locked in place before it warped while drying.

Last time I went to pick up a 2x4 someone had swapped them out for a pallet of hockey sticks.  Good lumber is hard to find.

[bigheadfred]

The good stuff goes to China.

Wood that has set around a while tends to be worse for warping than fresher stuff.

Load bearing walls should have some care done to them for straightness. Crown all studs the same way in a wall. And straighten them here and where by making a cut, (or 6  ^-^) at the peak of the bow (inside). Then pull out the bow and pound in a shim. Give it a sister to keep it straight.

I handle mostly hardwoods now. Everything comes rough sawn. A 4/4 board is 15/16ths. 8/4 is 1 7/8ths. So if I want  one inch thick board I have to start at 5/4. I don't know if there are any places left around here where you can get actual rough sawn pine these days. They all went out of business.

Everything I cut is for immediate use. The more it sits around the more useless, for cabinetry, it becomes. Same is true for any wood really.

I get to make some barn wood cabinet doors coming up for a place in Jackson Hole. That is always a freaking joy.     

[Oceander]

Well, If I was building from scratch here, all the exterior walls would be 2X6.

 In new construction, I would insulate the bejeebers out of it. When the wind changes in DC, there's a good chance the stupidity with energy use will start over again if safeguards aren't put in place to prevent that. That is something I just don't see happening, and all the rules and taxes will be written up by people who live where subzero weather is something they have heard of in National Geographic, but have never lived in.

2x6 on the exterior walls makes sense for a number of reasons, and not just because you have a deeper cavity into which you can put more insulation. 

[bigheadfred]

2x6 on the exterior walls makes sense for a number of reasons, and not just because you have a deeper cavity into which you can put more insulation.

Back when I was framing all the exterior walls were 2x6. We did one house that was 2x8 on 16" centers. Everything else was 24" centers. For the exterior walls.

[Oceander]

Back when I was framing all the exterior walls were 2x6. We did one house that was 2x8 on 16" centers. Everything else was 24" centers. For the exterior walls.

2x8 with 16" on center?  What sort of load was that carrying?

[bigheadfred]

2x8 with 16" on center?  What sort of load was that carrying?

It was  a normal house with an abnormal owner is all.

[Smokin Joe]

2x8 with 16" on center?  What sort of load was that carrying?

Whatever it is, it should be able to carry it for a long time.