New home buyers will pay for that new Canadian lumber tariff

Trump hits Canadian lumber with steep tariffs
Trump hits Canadian lumber with steep tariffs

Who's really going to end up paying for the new Trump tax on Canadian lumber? New home buyers in the U.S.

The Trump administration announced Monday plans to impose duties of up to 24% on most Canadian lumber, charging that lumber companies there are subsidized by the government. Canadian lumber makes up about 30% of the U.S. market.

The tax is expected to hike the price of lumber used in home building by an average of 6%, according to the National Association of Home Builders, the trade group for the U.S. industry.

"For builders, it'll increase the cost of construction by about $3,000 on the average home, which unfortunately will be passed on to consumers," said Jerry Howard, CEO of the group.

Related: Trump slaps first tariff on Canadian lumber

Canadian producers say they're confident that U.S. buyers will have to keep buying their lumber, even with the higher prices.

"They rely on imports," said Steve Rustja, a vice president at Canadian lumber company Weston Forest. "Who is going to end up paying for it? Ultimately it'll be the U.S. consumer."

Builders argue that higher prices will translate into a slowdown of construction activity that could cost 8,000 U.S. jobs and $500 million in lost wages.

Related: Who knew Trump would go after Canada?

But U.S. lumber producers argue that Canadian lumber companies get unfair support from the Canadian government, which owns most of the land on which the trees are harvested.

"The duties are an essential step to make sure we don't lose more jobs," said Zoltan van Heyningen, executive director of the U.S. Lumber Association.

He also argues that the tarrifs won't boost home prices by nearly as much as builders say it will. He points out that the average cost of building a new home is $225,000, and that $3,000 is a fairly small proportion of that.

"The impact [of duties] on consumers' ability to buy homes is miniscule to non-existent," said van Heyningen. "We have 360,000 [lumber] jobs dependent on a level playing field with Canada."

--An earlier version of this story gave an incorrect figure for the amount of lost wages projected by home builders.

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