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Experts Warn Canadian Lumber Tariffs Could Affect Residential, Commercial Construction

Experts Warn Canadian Lumber Tariffs Could Affect Residential, Commercial Construction

July 3, 2017

Just a few months ago, the U.S. Department of Commerce put into place a duty rate of approximately 20 percent on Canadian softwood lumber exports to the U.S., a tariff that was retroactive for 90 days. And while the move by the administration is meant to be a boon to U.S. industry, some experts warn that it may have a boomerang effect, resulting in additional challenges for the U.S. lumber industry.

At the center of the decision is a dispute between lumber companies on each side of the border. As the Canadian lumber industry uses government-owned forests, U.S. officials have argued that the Canadian government has unfairly subsidized Canadian companies to undercut the lumber industry in the U.S., where forestland is for the most part privately-owned.

Change Likely to Have Impact on Construction Business, Contractors, Architects

The lumber tariff could have unintended consequences, say some analysts, who believe the ripple effects could put additional pressure on the housing industry, with implications for homebuyers’ pocketbooks. About a third of the lumber used in the U.S. is imported.

In a story published by U.S. News & World Report, “Could Trump’s Lumber Tariffs Cut the Wrong Way,” the National Association of Home Builders (NAHB) reports that 95 percent of lumber imports came from Canada last year.

The NAHB predicts that if the duty remains in effect through the end of this year, the losses would total:

  • $498.3 million in earnings for workers in the U.S. These losses could be reflected over a number of industries, including construction, architecture, building materials transportation, engineering and more. Meanwhile, some jobs could be gained in the U.S. sawmill industry, but those would be offset by losses in other industries.
  • $350.2 million in revenue, including taxes for U.S. governments.
  • 8,241 full-time jobs in the U.S., again across multiple related industries.

The NAHB further estimates that the average 20 percent duty would decrease Canadian imports of softwood lumber by 1.2 billion board feet and increase domestic producer output for the U.S. market by 834.4 million board feet.

Ripple Effects of Lumber Tariff Likely to Hit Commercial Construction, Home Construction

Some experts say builders may not see the impact of the lumber tariffs for six months. The cost increases could lead to a decrease in investments, according to the NAHB, with a projected slide in multifamily structures of $146.1 million.

Canada has said the tariffs are unfair, and has vowed to fight them.