Meanwhile, How's Trump's Lumber Tariffs Doing?

[InTheLight]

In April 2017 the US Commerce department announced tariffs on Canadian lumber of between 3% and 24%. Then in June they announced another 7.7% tariff on lumber. Canada is the world's largest exporter of lumber and the US gets about 33% of its lumber from Canada.

Now, this:

With Lumber in Short Supply, Record Costs Set to Juice Home Prices
A lumber shortage has pushed prices to record highs as builders stock up for what is expected to be one of the busiest construction seasons in years.

Builders say the higher lumber costs are making homes more expensive. Lumber prices started rising last year after fires destroyed prime forests and a trade dispute between the U.S. and Canada restricted supplies. Now a shortage of railcars and trucks is forcing builders to pay even more. [comment: I wonder if the steel tariff will drive up the cost of producing trucks and railcars?]

“We are in a lumber supply crisis,” said Stinson Dean, a broker in Kansas City, Mo., who ships wood from sawmills to lumber yards, in a note to clients. “None of us have experienced a market like this.”

Marc Towne of Classic Homes, which builds midrange to high-end houses in Colorado Springs, Colo., said he is spending $8,500 more on lumber for a typical home than a year ago, an increase of almost 40%. The company’s passing on about half the cost to buyers for now while it waits to see if lumber prices fall.

Prices for common building varieties like spruce and southern pine are at or near records, according to price-tracking publication Random Lengths. March-dated lumber futures at the Chicago Mercantile Exchange hit a record of $532.60 per 1,000 board feet last week after climbing more than 50% in 14 months.

That run-up began with a trade dispute between the U.S. and Canada, which provides about a third of U.S. timber, leaving many dealers hesitant to restock at elevated prices. The Trump administration eventually instituted tariffs of 20% or more on Canadian sawmills.

With Lumber in Short Supply, Record Costs Set to Juice Home Prices

 

[Reynolds]

In April 2017 the US Commerce department announced tariffs on Canadian lumber of between 3% and 24%. Then in June they announced another 7.7% tariff on lumber. Canada is the world's largest exporter of lumber and the US gets about 33% of its lumber from Canada.

Now, this:

With Lumber in Short Supply, Record Costs Set to Juice Home Prices
A lumber shortage has pushed prices to record highs as builders stock up for what is expected to be one of the busiest construction seasons in years.

Builders say the higher lumber costs are making homes more expensive. Lumber prices started rising last year after fires destroyed prime forests and a trade dispute between the U.S. and Canada restricted supplies. Now a shortage of railcars and trucks is forcing builders to pay even more. [comment: I wonder if the steel tariff will drive up the cost of producing trucks and railcars?]

“We are in a lumber supply crisis,” said Stinson Dean, a broker in Kansas City, Mo., who ships wood from sawmills to lumber yards, in a note to clients. “None of us have experienced a market like this.”

Marc Towne of Classic Homes, which builds midrange to high-end houses in Colorado Springs, Colo., said he is spending $8,500 more on lumber for a typical home than a year ago, an increase of almost 40%. The company’s passing on about half the cost to buyers for now while it waits to see if lumber prices fall.

Prices for common building varieties like spruce and southern pine are at or near records, according to price-tracking publication Random Lengths. March-dated lumber futures at the Chicago Mercantile Exchange hit a record of $532.60 per 1,000 board feet last week after climbing more than 50% in 14 months.

That run-up began with a trade dispute between the U.S. and Canada, which provides about a third of U.S. timber, leaving many dealers hesitant to restock at elevated prices. The Trump administration eventually instituted tariffs of 20% or more on Canadian sawmills.

With Lumber in Short Supply, Record Costs Set to Juice Home Prices

With higher material cost comes higher prices. As manufacturing and its support industries gear up, so do wages.

 

[InTheLight]

With higher material cost comes higher prices. As manufacturing and its support industries gear up, so do wages.

Sorry, but no. That's not how it works. If costs and prices go too high, consumption decreases. Manufacturing does not "gear up" when consumption decreases. Wages almost are always the laggard in the economic equations. They are the last thing to be affected.

Wages increase when there is a shortage of labor and unemployment is at historic lows.

 

[HankD]

IMO Steel and Aluminum tariffs will stimulate homegrown Steel and Aluminum fabricating from our own iron/pig iron and bauxite natural resources.

My son lost his previous job due to cheap Chinese steel manufacturing.

 

[Reynolds]

Sorry, but no. That's not how it works. If costs and prices go too high, consumption decreases. Manufacturing does not "gear up" when consumption decreases. Wages almost are always the laggard in the economic equations. They are the last thing to be affected.

Wages increase when there is a shortage of labor and unemployment is at historic lows.

You said "too high."

 

[Baptist Believer]

My family grows timber on three different tracts of land. We have had two tracts cut over the past six months - one clear cut for replanting, and the other a thinning cut.

Timber prices are down in Texas, and the most recent cut the family received the lowest prices in memory (adjusted for inflation). The most recent cut also included a significant amount of hardwoods (a higher value product than southern pine).

If the tariff is having any effect at all, it is certainly not raising timber prices in the U.S.

 

[777]

Wages increase when there is a shortage of labor and unemployment is at historic lows.

Yeah, but these tariffs are supposed to create jobs, not necessarily raise wages - that is already happening but what's unusual is these tariff hikes while the official unemployment rate is so low. I guess you could argue that the tariffs are narrow in scope, but this is steel, aluminum and lumber here, they are used in everything.

Lumber here is in trouble, but Canada isn't the only reason:

.Idaho logging salvage project could be national model for wildfire job programs

Canada logs their federal land, the US doesn't and that's the main reason for this trade imbalance. That, and the EPA shutting down the industry here and the clear-cutting many here in the PNW insist on, rather than selective cutting.

 

[InTheLight]

In November, the Department of Commerce imposed a 20.83% tariff on shipments of softwood lumber from Canada. While the move was forecast to spur new jobs and increase domestic lumber production, it caused the price of lumber (https:// www.nahb.org/en/research/housing-economics/construction-statistics/national/framing-lumber-prices.aspx) to jump nearly 15%. "Those costs have largely been passed along to consumers, and you've seen new home prices touch new highs," Terrazas said.

It added $6,000 to $10,000 to the cost of a median-priced home, he said.



Sent from my Pixel 2 XL

 

[777]

6-10k according to the Zillow economist, yet these people claim:

A 15 percent tariff raises the cost of a new home about $150, the U.S. Lumber Coalition said.

But the National Association of Home Builders has a more negative outlook. The builders’ group estimates the impact of a 20 percent duty, if collected through 2017, would be a loss of nearly $500 million in wages and salaries for U.S. workers and 8,241 full-time jobs in this country, including 5,565 in construction.

The average price of a new single-family home would go up $1,236 and a $424 increase in the market value of an average multi-family home, Paul Emrath wrote Tuesday in a National Association of Home Builders blog about potential impacts of the new tariffs.

Van Heyningen countered that the National Association of Home Builders analysis is inaccurate because it factors materials that do not fall under the new tariffs deal.

https://www.redding.com/story/money...mber-tariffs-impact-jobs-consumers/100929688/

quite a discrepancy, somebody here is dead wrong. But the above article does talk about the expiration of the old tariffs -
Canadian producers pay nothing to cut trees other than the price of labor and equipment. The trees are free, to them.

American producers must pay for the trees, whether they are in Canada or the US. In 2016 or so, the US complained to ITO about Canadian dumping and won, a rarity.

 

[InTheLight]

A 15 percent tariff raises the cost of a new home about $150, the U.S. Lumber Coalition said.

This is obviously wrong. Consider how much wood is used to build a house. No way is there only $1,000 worth of wood being used to build a house!

Sent from my Pixel 2 XL

 

[OnlyaSinner]

My family grows timber on three different tracts of land. We have had two tracts cut over the past six months - one clear cut for replanting, and the other a thinning cut.

Timber prices are down in Texas, and the most recent cut the family received the lowest prices in memory (adjusted for inflation). The most recent cut also included a significant amount of hardwoods (a higher value product than southern pine).

If the tariff is having any effect at all, it is certainly not raising timber prices in the U.S.

From the OP:
Prices for common building varieties like spruce and southern pine are at or near records, according to price-tracking publication Random Lengths. March-dated lumber futures at the Chicago Mercantile Exchange hit a record of $532.60 per 1,000 board feet last week after climbing more than 50% in 14 months.

I work for the agency that manages most of our state-owned forest lands, and we saw our net price (stumpage) for spruce-fir sawlogs drop 43% from fiscal (7/1 to 6/30) 2015 to fiscal 2017. That 50% rise would bring this year's price back to 85% of the FY2015 rate.

 

[InTheLight]

From the OP:
Prices for common building varieties like spruce and southern pine are at or near records, according to price-tracking publication Random Lengths. March-dated lumber futures at the Chicago Mercantile Exchange hit a record of $532.60 per 1,000 board feet last week after climbing more than 50% in 14 months.

I work for the agency that manages most of our state-owned forest lands, and we saw our net price (stumpage) for spruce-fir sawlogs drop 43% from fiscal (7/1 to 6/30) 2015 to fiscal 2017. That 50% rise would bring this year's price back to 85% of the FY2015 rate.

OK, are/were those prices "near record levels?"

Sent from my Nexus 7 using Tapatalk

 

[OnlyaSinner]

OK, are/were those prices "near record levels?"

Sent from my Nexus 7 using Tapatalk

Not really. Those higher FY2015 prices were almost back up to what we were receiving in the mid 1990s.

 

[InTheLight]

OnlyaSinner, do you figure that paper prices, cardboard prices and other paper-based products will increase in price due to the lumber tariffs?

 

[OnlyaSinner]

OnlyaSinner, do you figure that paper prices, cardboard prices and other paper-based products will increase in price due to the lumber tariffs?

Little if any, IMO. Sawmills usually chip the slabs and edgings from sawn logs and send those chips to paper mills, but that material is generally a very small portion of mill feed. I suppose if the market for lumber went completely in the tank, logging operations which produce both sawlogs and pulpwood might shut down, and have some effect. But I (with almost zero formal education in economics) would find it hard to blame that sequence on the tariffs.

 

[InTheLight]

Impact of the Canadian Lumber Duties on the U.S. Economy in 2018
By Paul Emrath

On November 2, 2017, the Commerce Department announced its final decision to impose duties averaging 20.83 percent on Canadian softwood lumber shipments into the U.S. The impacts of these duties on the U.S. economy next year will include increased production by U.S. sawmills, reduced imports from Canada, and higher prices paid for lumber by consumers in the U.S., which in turn will lead to a reduced volume of new residential construction. The National Association of Home Builders (NAHB) estimates that the bottom line impact of these effects in 2018 will be a net loss of

• $576.9 million in wages and salaries for U.S. workers,
• $404.0 million in taxes and other revenue for governments in the U.S., and
• 9,370 full-time U.S. jobs.

The jobs are measured in Full Time Equivalents (enough work to keep a worker employed full-time for a year, based on the average hours worked per week in each affected industry).

Impact of the Canadian Lumber Duties on the U.S. Economy in 2018