US homebuilders face a supply chain snarl from tariff battles
President Trump’s push for levies on Canada hamper efforts to import lumber from the country
PRESIDENT Donald Trump’s push for tariffs on Canada – and his administration’s subsequent delays and exemptions – are frustrating efforts to import lumber from the country and putting the building supply market on edge.
The back-and-forth over whether tariffs will be imposed or not has businesses unable to trust price stability, and risks backing up the supply chain for US homebuilders. The reluctance to pay a tariff, which could be changed or cancelled any day, “freezes these markets up,” according to Don Magruder, who runs a building material company based in Florida.
“There’s a lot of concern from builders,” said Magruder, chief executive officer of RoMac Building Supply, which sells lumber and other materials to homebuilders. In the supply chain, “no one knows what to buy, and when to buy, and how much they’re going to pay for it.”
Andy Rielly, president of Rielly Lumber in West Vancouver, British Columbia, said he’s been in talks with long-term customers on how to divvy up the extra costs, but not everyone has been able to strike deals.
Making foreign nations pay
Trump has characterised tariffs as a way to make foreign countries pay, exemplified in his order to look into establishing an “External Revenue Service” to mirror the Internal Revenue Service, which collects Americans’ taxes. Tariffs are typically payable by importers and collected today by existing agencies such as Customs and Border Protection.
The US’s National Association of Home Builders chairman Buddy Hughes said tariffs risk worsening housing affordability.
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The US Lumber Coalition, a Washington-based organisation representing American producers, however, has long said that lumber prices are only a fraction of homebuilding costs, pointing instead to expensive land and labour as a price driver.Additional controls
Additional controls
Currently, Canada supplies as much as 30 per cent of the softwood lumber the US uses.
“Now, we’ve got this hard education programme going for people in the United States that are just starting to realise that when you put that tariff on, either the lumber’s not going to flow to the US, or that tariff’s going to be built into the price,” Rielly said.
Canadian operators are accustomed to dealing with import taxes: the US already charges duties of about 14.5 per cent on Canadian softwood lumber – one of which is due to almost treble, pending confirmation, later this year. Alongside an order to expand domestic timber supply, Trump has also launched an investigation into the national security risk posed by wood imports, which could pave the way for additional controls.
Rielly predicted that higher prices would ultimately hurt Americans, such as the residents in Los Angeles who lost their homes to the devastating wildfires and are seeking to rebuild.
“The poor guy trying to rebuild his house in Pacific Palisades, he’s the guy that’s gonna pay it,” he said. BLOOMBERG
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