To me, one of the grand economic questions is just how much will the typical American pay to save another American’s job?
While it’s great to talk about “America First” business principles, economics has a funny way of creating unintended consequences. Hiring American and buying American are well-intentioned ideas. But what if American-made doesn’t offer the best value or top quality?
Prime example: Tariffs on Canadian lumber.
The Trump administration is slapping a 20 percent tariff on certain imported wood from Canada, the type of lumber typically used in new residential construction. The beef? Canadian lumber makers get an unfair cost advantage vs. U.S. competitors due to Canadian government subsidies. Not only do Canadians disagree about the alleged trade trickery, they are threatening their own brand of retaliation.
Yes, cheap foreign wood — fairly created, or not — costs certain American workers their jobs and U.S. manufacturers’ profits. Yet other stakeholders — U.S. lumber users and indirectly U.S. homebuyers — enjoy the lower-cost materials. Roughly one-third of homebuilding lumber is imported with 95 percent of that supply coming from Canada.
Wood is a major financial component of a house, roughly one-eighth of construction costs. And since Donald Trump’s election – a campaign highlighted by his tough talk on trade — lumber prices have soared.
One key price benchmark for homebuilding wood is up 22 percent this year, according to the National Association of Home Builders. That same commodity price had fallen 10 percent over the previous two years.
This year’s lumber jump translates to a $3,600 increase in typical construction costs for a new home, by the association’s math. And you know who will pay much of that cost: the homebuyer.
The association also estimates pricier wood due to tariffs will cost a net 8,200 U.S. jobs — from losses in homebuilding-related work to gains in domestic lumber products — as the…