Industry trade

High timber prices add urgency to decades-old trade struggle

In 2016, towards the end of the Obama administration, the US lumber industry asked the government to impose duties on imports of Canadian lumber in response to what it considered to be practices. unfair trade. The process continued under the Trump administration, which in 2017 imposed tariffs of 20.2% on most Canadian producers. The rate was cut to 9 percent last year.

The status of the long-running conflict has taken on new urgency as the price of lumber has skyrocketed in the past year. The National Association of Home Builders estimated in April that the higher costs of wood had added nearly $ 36,000 at the price of an average newly built single family home. A benchmark for lumber prices set a record $ 1,515 per thousand board feet in May, four times the price at the start of 2020, before starting to drop. Last week, the price rose to $ 930, more than double its early 2020 level, according to Fastmarkets Random Lengths, the trade publication that publishes the benchmark.

“As an economist, it’s very difficult to understand why we tax something that we don’t produce enough,” said Robert Dietz, chief economist for the National Association of Home Builders.

On the other side of the issue are the American lumber producers. The US Lumber Coalition, an industry group, argued that high demand, not duties, pushes up lumber prices and that duties are only a small portion of the total cost of lumber for homes. new.

The coalition attributes the rights to strengthening the U.S. lumber industry, saying in a statement that U.S. sawmills have increased capacity in recent years, producing an additional 11 billion board feet of lumber since 2016. “More lumber manufactured in America to meet domestic demand is a direct result of commercial application, and the US industry strongly urges the administration to continue this application,” the coalition said.

Dustin Jalbert, senior economist at Fastmarkets, a pricing information company, attributed the chaotic timber market and high prices largely to the effects of the pandemic. At the start of the pandemic, he said, sawmills “took the worst off” and put the brakes on production, only for the housing market to rebound and demand to soar.

Mr. Jalbert said duties arising from the dispute between the United States and Canada were not a major reason for the high prices. “In terms of the short-term price situation, it’s lower on the list in terms of factors that lead to the record prices we’ve seen in the market,” he said.

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