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Tariffs and wood

Trade war hits home

Price volatility in today’s wood market is creating uncertainty for some construction trades, including commercial millwork where steady price and availability of wood products is mission-critical for cabinets, countertops, panels, and trim. To gain additional insights into wood markets we checked with Adam Caltabiano of Aura Hardwoods. Aura sees the recent trade tariffs as the cause of the current price changes. “We estimate domestic hardwood plywood has had an average of 15-20% increase the last 6 months” says Caltabiano. “The biggest impact has been the tariff on Chinese import plywood. 40% of the plywood consumed in North America was coming from China. In addition, softwood lumber coming from Canada, specifically Western Red Cedar, Alaskan Yellow Cedar, and VG Fir are being taxed and this has impacted the softwood market here in the states.”

Simultaneously, hardwood prices are dropping due to the loss of export markets.  “China and other countries are starting to retaliate with their own tariffs, in some instances we are seeing some hardwood lumber supply sit, creating surpluses in our domestic market” says Caltabiano.

Eric Mendelson, Controller at Elements Manufacturing, says the company is beginning to feel these changes. “At Elements, we are seeing  increases in the price of wood and metal products but have not passed these costs on to our customers. We will continue to monitor the impact these changes are having on our margins.”

Evidence of price changes due to the trade war have been well documented. Here’s a list of recent stories:

Bloomberg cites the impact, both positive and negative, on various companies, both foreign and domestic.

CBS News reports that tariffs on Canadian lumber are adding to higher costs for wood, which are fueling price increases of up to $9,000 for a new single-family home, according to the National Association of Homebuilders.

Fortune explains that half of U.S. hardwood production is exported, and the bulk goes to China. “This could be, I don’t want to say ‘catastrophic,’ but very, very painful for the industry,” said Michael Snow, executive director of the Sterling, Virginia-based American Hardwood Export Council.

Kitchen and Bath Design News reports that the U.S. cabinet industry would be “directly impacted” as a result of proposed new tariffs to be imposed on a wide range of wood-related imports from China.

CNBC estimates that the new tariffs will increase the price of an average single-family home by $1,236, with lumber prices up 22%.

The National Association of Home Buyers estimates the cost of a new, single-family home has increased by $6,388, and a net job loss of over 9,000 jobs.

Eye on Housing shows how tariff impacts are calculated and concludes a net loss of $576.9 million in wages and salaries for U.S. workers, $404.0 million in taxes and other revenue for governments in the U.S., and loss of 9,370 full-time U.S. jobs.

Woodworking Network The Administration reportedly received more than 6,000 written comments and testimony from U.S. companies and groups, including the National Hardwood Lumber Association, urging reconsideration, and saying that it could ruin their businesses.

Black and Decker reports that the tariffs are having an negative impact on the company’s bottom line.