Are High Timber Prices “Linked” to the Trump Administration?

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A congresswoman from North Carolina said former President Donald Trump was partly responsible for the increase in lumber prices.

U.S. Representative Alma Adams, a Democrat from the Charlotte area, raised the issue when she asked Federal Reserve Chairman Jerome Powell about inflation at a committee meeting on July 14.

Adams wanted to know why Powell thinks recent inflation trends are temporary. And while finishing her question, she said that an increase in timber prices “may be linked to the actions of the previous administration”.

“My local housing partnership had to put off construction of an affordable housing site due to a funding gap caused by soaring timber prices. And although timber prices may be linked to the actions of the ‘previous administration, I know many are still concerned about the rise in base prices. ”

“So I hope you can help us allay some of these concerns. So, could you tell us why you think the recent inflation trends are temporary as the economy reopens and what other factors are playing into the upward pressure on prices? “

Later that day, a Twitter user took issue with Adams’s explanation. She responded by expanding on her comments in a tweet.

“The Trump administration’s high tariffs on Canadian lumber have pushed prices up. Supply chain disruptions from the pandemic have compounded the problem and pushed prices even higher, ”she said. tweeted the 14th of July.

Is she right about this?

Trump has imposed a tariff on Canadian lumber and it’s fair for Adams to point out that this has pushed up lumber prices, experts tell us. However, experts say lumber prices are more complicated than his statement suggests.

There are a number of reasons why the recent rise in lumber prices is not entirely – or even primarily the result – of Trump’s tariffs.

When the prices started to go up

By the time Trump imposed tariffs on lumber in 2017, prices were already on the rise due to uncertainty surrounding an expired trade deal. The United States and Canada had a 10-year trade pact that expired at the end of 2016.

David Logan, director of tax and business analysis for the National Association of Home Builders, wrote in March 2017 that “the failure to secure a new (business) deal is the main catalyst for price increases across the country. Marlet”.

A month later, the Trump administration announced tariffs of 20% on Canadian lumber and up to 24% on specific lumber companies.

Lumber prices have always been volatile, experts told PolitiFact. They can range from $ 300 to $ 600 per thousand board feet in stable economic times.

The price hovered just below $ 400 per thousand board feet in early 2017, then rose to $ 600 in the summer of 2018.

It’s fair to say that Trump’s tariffs contributed to this increase, experts told PolitiFact. Other factors also played a role. Lumber market expert Paul F. Jannke, director of Forest Economic Advisors, told The New York Times that a reduction in the supply of Canadian lumber has also contributed to the price increase. .

Fast forward to 2020. When the pandemic sets in, some sawmills close or reduce production because they anticipate a drop in demand. But their predictions were wrong.

More and more Americans have started working from home and decided to take on home improvement projects. Demand for lumber is increasing and prices hit $ 950 per thousand board feet in September, according to the NAHB.

Meanwhile, the World Trade Organization ruled in August that the Trump administration’s rationale for the 2017 timber tariff was off-base. And at the end of last year, the US Department of Commerce reduced the softwood lumber tariff to 9%.

Prices soar in 2021

Last year’s price hike was just the start. Lumber prices hit an all-time high of $ 1,670 per thousand board feet in May as demand increased for limited supply, CNBC reported.

The lumber industry’s struggle to meet demand has been well documented in the US media, from Vox and CNN to Fortune and Bloomberg. Experts told PolitiFact that there are many factors that determine the price of lumber. Trump’s tariff is one of those factors, but is not the main cause of the hike.

The price increases “can be attributed to factory closures and a massive reduction in production upon reopening based on the mistaken assumption that the housing market will stagnate indefinitely,” said Logan, the expert on the market. NAHB, at PolitiFact in April.

Adams spokeswoman Sam Spencer said the congressman’s tweet accurately summed up the effect of the tariffs.

“The price of timber can be linked to tariffs: if there is a tightening of supply, the fact that we artificially increase the price of importing that specific product by default contributes to the price increase,” he said. Spencer said in an email.

While tariffs certainly helped push lumber prices up in 2018, “this second increase is unrelated to the Trump tariff,” said Vincent Smith, an agricultural policy expert at the American Enterprise Institute. “It was a demand driven push.”

Adams “is not mistaken about the impact of the Trump tariffs in 2017,” Smith said, adding, “that does not explain the price spike afterwards.”

The softwood lumber tariff “isn’t helping,” said Thomas A. Firey, senior researcher at the Cato Institute and editor of its Regulation magazine.

“However, the tariff is set and adjusted by law, and it is unfair that the congressman accuses Trump of initiating it (or Biden, whose administration is being forced to raise it),” Firey told PolitiFact in an email.

USA Today fact-checkers came to a similar conclusion.

Scott Lincicome, principal researcher in economic studies at the Cato Institute, says the fluctuating cost of lumber in the United States is the result of a trading system that has yet to be reformed. Regulations regarding how much lumber is available – who is allowed to produce it and how it is taxed – are designed to benefit the US lumber industry, sometimes to the detriment of the consumer. The disadvantages of the system are exacerbated during seasons of high demand.

“It’s actually true that the Trump administration’s Commerce Department enforced the tariffs, but beyond that, blaming it is pretty absurd,” Lincicome said.

Experts also pointed out that Biden was in office as lumber prices peaked and failed to act to lower tariffs. The Commerce Department is now proposing to double the lumber tariff to 18%. CNN and Fortune Magazine report that Biden, for his part, has yet to take a position on the proposal.

Our decision

Adams, referring to Trump’s time as president, said that “timber prices may be linked to the actions of the previous administration.” She then tweeted a claim that Trump’s tariffs were a cause.

Trump increased the tariff on Canadian lumber in 2017 and prices increased the following year. However, prices have skyrocketed even higher over the past year due to market changes in the era of the pandemic. Economists say this is largely the result of unforeseen supply and demand problems.

While Trump’s tariffs have contributed to record lumber prices, economists say it’s misleading to blame them entirely.

Adams’s statement is partially correct but leaves out important details or takes things out of context. We rate it as half true.



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