Tariff on Canadian lumber imports to raise Las Vegas home prices

Kevin Ferguson

Monday, Aug. 20, 2001 | 11:17 a.m.

People looking to buy a new home in Southern Nevada can expect to see a $1,000-plus spike in prices thanks to a tariff recently imposed on Canadian lumber, the past president of the local Framing Contractors Association said.

But some industry observers say the preliminary 19.3 percent tariff on Canadian imports will be short-lived. They predict it will be killed by Congress in December or by the International Trade Commission in early 2002.

The Commerce Department imposed the tariff Aug. 10, which led to an immediate rise in lumber prices by about 5 percent, industry experts said.

Richard Thomas, past president of the local Framing Contractors Association, said the added expense to the home builder will be passed on to the home buyer.

"For a $150,000 home, the price probably went up $1,000-plus, unless the home was pre-sold," said Thomas, who is also vice president of Gary G. Day Construction. "If it was pre-sold, the home builder will eat the cost, but will pass it on to the next round of home buyers."

The tariff was imposed by U.S. Commerce Secretary Donald Evans in retaliation for alleged illegal government subsidies to Canada's softwood lumber producers, which supply about a third of the wood used to build U.S. houses.

The Southeastern Lumber Manufacturer's Association based in Atlanta is one group that has lobbied hard for the tariff on Canadian lumber.

"The Canadian government provides a subsidy equal to about a one-fourth to one-third of the cost of its lumber compared to the U.S. market, which gives them a tremendous advantage," SLMA spokeswoman Debbie Burns said. "We need this tariff to compete."

Burns said 27 U.S. lumber mills have closed in the past 12 months compared to two in Canada.

Michael Carliner, economist for the National Association of Home Builders, said his group doesn't dispute that U.S. mills have been closing, but he said it's not because of competition from Canadian imports.

"The U.S. market can't supply enough timber for the home building industry and so we have to rely partly on the Canadian market," he said. "It takes a long time to grow a tree."

Thomas said the tariff is allowing U.S. lumber companies to hike their prices as well.

The tariff has little chance of surviving debates in Congress and with the International Trade Commission, said Monica Caruso, spokeswoman for the Southern Nevada Home Builders Association.

"Part of the reason is (the tariff) is illegal. It's against NAFTA," Caruso said, referring to the North American Free Trade Agreement.

Even though the construction industry is Southern Nevada's second largest industry behind gambling and tourism, Caruso said Las Vegas-area builders aren't using their political muscle to lobby against the tariff.

The National Association of Home Builders is leading the drive against the levy.

"I'm in nerve-central (for Southern Nevada) and the phones aren't ringing off the hook," she said. "The NAHB is a stronger lobbying group."

"This (tariff) represents free trade in reverse gear. It's bad trade policy, bad economic policy and it would... raise the cost of housing," said Bruce Smith, president of the National Association of Home Builders.