Members of Congress and the Biden administration are heeding the concerns of NAHB and its grassroots on the need to take action to resolve soaring lumber prices, supply shortages and tariffs that are hurting home builders, home buyers, the housing sector and the economy.
(View a video montage of policymakers discussing the issue at the end of this blog post.)
U.S. Trade Representative Katherine Tai told Senate lawmakers that she would "push for solutions to the lumber pricing issues" and address the issue of tariffs on Canadian softwood lumber imports into the United States during a May 12 Senate Finance Committee hearing on President Biden's 2021 trade policy agenda.
Tai reiterated her willingness to act on this issue 24 hours later during a House hearing in which four bipartisan lawmakers spoke about the need to seek remedies for rising lumber prices by boosting production and ending tariffs on Canadian lumber imports into the United States.
During the House hearing, Rep. Kevin Hern (R-Okla.) submitted a statement of record from NAHB where we stated that "resolving the long-running dispute with Canada over the trade in softwood lumber and addressing the steel and aluminum tariffs must be a top priority of Congress and the Administration. Building safe, decent and affordable housing depends in large part upon a stable and affordable supply of building materials."
Separately, Sen. Jerry Moran (R-Kan.) delivered a Senate floor statement on lumber on May 11 where he cited NAHB statistics on how rising lumber prices have added nearly $36,000 to the price of a new home and a $13,000 increase in the market value of a multifamily unit. Moran called for the elimination of lumber tariffs and to "boost the domestic types of the types of lumber used in home construction."
Finally, Sens. Moran and Jeanne Shaheen (D-N.H.) sent a joint letter to Tai this week stating that "the complete elimination of these [lumber] tariffs is necessary to provide relief from rising lumber prices. American home buyers, not Canadian lumber producers, are the ones who end up paying the cost of these trade restrictions."
Senate Hearing Highlights
Sen. Charles Grassley (R-Iowa): Yesterday I met with the Iowa Association of Home Builders. They told me that lumber prices had skyrocketed tremendously. They gave me a figure of 300% since April 2020. Have you had conversations within the administration on what can be done to lower the 9% tariff on Canadian lumber?
U.S. Trade Representative Tai: This is not just something we've been talking about within the administration but something that I've raised directly with my Canadian counterpart and I’ve certainly heard a lot from members of Congress about this as well. I want to assure that I will be raising this again with my Canadian counterpart at the free trade commission meeting of the USMCA and I will continue to push for solutions to the lumber pricing issues that we are experiencing.
Sen. Bob Menendez (D-N.J.): I’ll submit a question to you [Tai] about whether you are working on a new softwood lumber agreement with Canada. I keep hearing from housing people that it is incredibly challenging.
Sen. John Thune (R-S.D.): The home builders, the realtors, everybody in my state is talking about the cost of lumber and how that's driving up housing costs in this country and really curtailing new construction because just pricing homes in a way that is outside the reach of a lot of families in this country. One of the issues they consistently raise are the tariffs on lumber coming in from Canada. Can you speak to that issue and what's being done to address that and the impact that those tariffs have on the cost of lumber in this country and ultimately on the cost of housing?
U.S. Trade Representative Tai: The free trade commission that is required to meet within the first year of the USMCA is meeting next week and I will be raising our concerns with the Canadians. But obviously I look forward to continuing this conversation with you and the many other members of Congress who have raised concerns about this on both sides of the issue.
House Hearing Highlights
Rep. Mike Thompson (D-Calif.): I appreciate how the pandemic has exacerbated trade issues and disrupted supply chains. This has a real life impact on my district where we just lost thousands of homes because of the deadly fires that we experienced. The surge in lumber prices is making it harder to rebuild. This is hurting real people already reeling from these fires. One way that we can help address this is by doing away with the tariffs on Canadian softwood lumber.
Rep. Steven Horsford (D-Nev.): I know earlier Mr. Pascrell [Democratic congressman from New Jersey] raised the issue around the lumber issue. I joined in that letter to you and would just ask that we receive a follow up. I am particularly concerned in Nevada with the rising housing costs and how its impacting people who are able to access affordable or attainable or workforce housing particularly as those costs escalate.
Rep. Kevin Hern (R-Okla.): At present, the U.S. and Canada lack an agreement governing the trade of softwood lumber. U.S. home buyers, home builders and everyone who participates in the supply chain is suffering due to these unnecessary cost increases. Last week, you in your response to Sen. Moran inquiring about the rising cost of lumber. You stated quote: "This will always be important to U.S.-Canadian relations. We have raised these issues with my counterpart already. Softwood lumber will always be in my sights. We have a lot of tools and plans to use them robustly and raise the concerns we have and engage our Canadian counterparts on how to manage longstanding differences and think outside the box." Ambassador, can you clarify what specific tools you plan to use?
U.S. Trade Representative Kai: We have a lot of tools. There's a NAFTA chapter that’s been brought into USMCA. Those are trade remedies that written into our trade agreement. We have our trade remedy provisions here in U.S. law. I'd be willing to sit down with my Canadian counterpart and think, "Hey, is there anything else that hasn't been tried before that we could try?"
Highlights from Sen. Moran’s Senate Floor Speech on Lumber
The reality is that record high lumber prices are putting the American dream of a home of homeownership out of reach for hundreds of thousands of potential home buyers and disproportionately harming middle- and low-income families across our nation. At a time when residential home building is booming, it is essential that home builders and consumers have access to the materials they need at competitive prices.
In April 2017, the US Department of Commerce announced countervailing duties averaging 20 percent on softwood lumber products from certain Canadian producers. In December of 2020, the average tariff was reduced to 9 percent.
While a reduction in tariffs for some Canadian producers is a step in the right direction, the complete elimination of these tariffs is necessary to provide additional relief for rising lumber prices.
In addition to working to resolve this trade dispute, we should also work to boost the domestic production of the types of lumber used in home construction. Additional lumber can and should be sustainably harvested from public lands managed by the U.S. Forest Service and the Bureau of Land Management. Adding to the existing lumber supply and ensuring that domestic sawmills are operating at full capacity will help soften lumber prices.
View video highlights from this week's Senate floor speech on lumber and congressional hearings.
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