The decision by the U.S. Department of Commerce to impose tariffs on Canadian lumber in the U.S. caused a stir this week. But the local consequences are still unknown.
Lumber suppliers in the Northwest were already raising prices in response to an uptick in new home construction. Homebuilder Lewis Mann uses lumber from Canada in custom homes his company builds throughout Washington, Oregon and the Idaho Panhandle.
“About three weeks ago, we got an email from the east side of our Washington borders -- the Spokane area,” Mann said. “Our lumber supply company was going to be raising their prices about 17 to 18 percent just in response to the market’s heat right now.”
And now comes this trade tiff involving imports of Canada’s softwood lumber -- wood such as pine, spruce and fir -- chiefly destined for home construction. Mann said the new tariffs could force him to adjust his own prices again.
“It’s kind of like you saying ‘I’m going to make a cake and my eggs went up,” he said. “The cake normally costs a dollar, but you’ve got a bunch of other ingredients that go into the cake, so those eggs, even though they went up 20 percent, you may only have to raise your cake price 2 or 3 percent.”
According to the National Association of Homebuilders, the price of a newly constructed home will go up an average $1,300 because of the new tariffs.
“There are so many variables in this,” said Russ Vaagen, whose family runs two small mills in Northeastern Washington. Vaagen Brother’s Lumber company also operates a small mill across the border in British Columbia. The cross-border trade dispute over lumber has been going on for nearly a century. That’s why the announcement didn’t surprise Vaagen.
“Nobody likes to pay an extra tax, but we’ve been setting money aside to do it retroactively on kind of a worst-case scenario,” he said. “This will very significantly affect our business in Canada and the viability of it.” So how could this shake out in the American Northwest? Forest landowners and mills might see an increase in demand and profits.
“That should translate into more jobs and more stability in our domestic industry in the United States,” Associated Oregon Loggers Executive Vice President Jim Geisinger said.
He’s not sure if loggers like the ones he works with can meet increasing American demand. “The mill capacity is certainly there, but the supply of raw logs is the variable that would answer your question,” Geisinger said. “And that’s an open question and it’s a good question.”
Some economists speculate Canada may export more lumber overseas in response to the U.S. tariffs. Natural Resources Canada specifically pointed to China as a promising export market. That could increase competition for log exporters that use U.S. ports in the Northwest. Ottawa is urging Canadian companies to take advantage of export and marketing support programs.