Tariffs garner range of reaction
While the U.S. Lumber Coalition celebrates, the NAHB critiques
Slapping tariffs on Canadian lumber has been described as an anti-consumer measure that could throw a dash of cold water on a slow-burning housing-market recovery.
They’ve also been described as the economic equivalent of a paper cut.
Who’s right? Ask 10 experts, and you might get 11 answers.
The National Association of Home Builders, whose interests often align with those of lumber dealers, is one of the sharpest critics of the plan to impose steep duties (averaging about 20%) on Canadian softwood lumber.
“The NAHB is deeply disappointed in this short-sighted action by the U.S. Department of Commerce that will ultimately do nothing to resolve issues causing the U.S.-Canada lumber trade dispute but will negatively harm American consumers and housing affordability,” NAHB chairman Granger MacDonald said in a statement.
And the group sure has done its math: A tariff of 19.9% would lead to a 6.4% increase in U.S. home prices, or an average of $1,236 for a single-family home.
That’s a highly inflated figure, says the U.S. Lumber Coalition, which petitioned for the action. The group claims unfair competition from producers it says are subsidized by the Canadian government.
The tariffs, announced late Monday, will “begin the process of creating a level playing field for the future,” U.S. Lumber Coalition legal chair Cameron Krauss said in a prepared statement. Krauss is also SVP of legal affairs for Seneca Sawmill in Eugene, Ore.
Canadian producers have about 28% to 34% of the market in the U.S, according to the NLBMDA, which has made a renewal of the Softwood Lumber Agreement between the U.S. and Canada a legislative priority.
While the impact of the price of lumber on the housing market is in doubt, so is the impact of the tariffs on the price of lumber. Markets have been adjusting in recent weeks in anticipation of increased duties. One account put prices up 25% in the past eight weeks. Another pointed to increases of 30% to 40% over the same time a year ago.
In 2016, imports of softwood lumber from Canada were valued at an estimated $5.66 billion, according to Commerce Department figures.
Several distributors and retailers declined to comment on the issue.
One industry executive, who asked not to be identified, said that some lumber dealers might be too polite to say it, but higher prices of lumber could allow higher margins for the dealers.
“Time will tell whether [the tariffs are] good or bad,” said the executive. “But I think that people need to keep in mind that the cost of lumber is just one of many factors in residential housing, and not the top cost item.”
Window on a $4.1 trillion budget proposal
The big-picture story on President Trump’s budget proposal is its intention to balance the federal budget by 2027, reducing discretionary spending by $1.5 trillion over 10 years.
The budget touches on a number of issues important to the housing and building supply industry. The National Lumber and Building Material Dealers Association identified the following highlights.
• As part of the proposed cuts to the EPA, enforcement for the Lead: Renovation, Repair, and Painting program is defunded. Although the regulation would remain in effect, responsibility for enforcement would be the responsibility of each state. There are 14 states authorized to run their own RRP programs: Ala., Del., Ga., Iowa, Kan., Mass., Miss., N.C., Okla., Ore., R.I., Utah, Wash., and Wis.
• The White House budget eliminates the entire $10.5 million for the Susan Harwood grant program, which funds nonprofit organizations that provide worker safety-training programs. It has existed since 1978.
• The budget also proposes eliminating several HUD programs, including the HOME Investment Partnership program, which provides funding for activities such as building and rehabilitating affordable housing for rent and homeownership. HOME is receiving $950 million in funding for the current fiscal year.
• An overhaul of the tax code is included in the budget. It reduces the number of personal income tax brackets from 7 to 3, lowers the business tax rate for both pass-throughs and corporations to 15%, and doubles the standard deduction.
Looming over the budget debate is the need to raise the debt ceiling that sets a limit on money the government can borrow.
Next Big Thing: Project planning with VR
Lowe's is helping shoppers better envision how to design and build their homes.
Though a partnership with Google, Lowe’s launched the Lowe's Vision app. Powered by Tango, a 3D technology developed by Google, the app leverages augmented and virtual reality to enable shoppers to begin planning their renovation needs before they even set foot inside a store.
“The Lowe's Vision app enables customers to easily measure any room in their home with the touch of a finger, and style it with virtual Lowe's products in real-time through augmented reality,” according to Lowe’s. The app is available to shoppers using the Tango-Enabled Phab 2 Pro smartphone.
Augmented and virtual reality is not a new project for Lowe’s. For the past two years, the chain has been developing visualization capabilities using these 3D reality tools. Lowe’s most recent initiative includes its “Holoroom How To” virtual reality-based classes, where a virtual reality headset and set of controllers immerses shoppers in a DIY project.
This adds to the other recently launched Lowe's Vision app functionality of In-Store Navigation, which taps into the power of augmented reality. Billed as the first retail application of indoor mapping using augmented reality to guide shoppers around the store.