Canadian delegate warns Utahns of more homebuilding price hikes due to proposed lumber tariff

SALT LAKE CITY — Canada's senior representative in the Mountain West visited Utah this week and is warning of another potential increase to lumber prices due to a proposed U.S. tariff.

"It has an impact especially here in Utah, where homebuilding is booming, and when you have the price of lumber skyrocketing. And hearing that extra duties will be imposed on the import of Canadian lumber, it will have the effect of either or both — either increasing the price of houses or making lumber even harder to find," Consul General Sylvain Fabi told KSL.com on Wednesday.

As part of the long-running softwood lumber trade dispute between Canada and the U.S., the Department of Commerce late last week recommended the country increase its duty rate to 18.32% from 9% as a way to combat what's considered the "dumping" of subsidized lumber into America, according to the U.S. Lumber Coalition.

While the U.S. lumber industry applauds the potential tariff increase to create a "level playing field," homebuilders decry the move as lumber costs continue to rise amid a national housing shortage.

The National Association of Home Builders believes the proposed increase shows "the White House does not care about the plight of American home buyers and renters who have been forced to pay much higher costs for housing," according to its chairman Chuck Fowke.

Lumber price increases added $16,000 to the cost of an average new home last August. In February, that had risen to $24,000, the association says. Last month, it was $36,000 as Utah and the country experience an explosion of home buying and renovation, which experts say is largely driven by pandemic-induced home isolation. That trend has led home prices to become 374% higher than the same time last year.

Because of constantly increasing prices of materials like lumber, many Utah home builders have moved to only selling completed homes. The alternative means going back to the buyer to negotiate a higher price.

Canada is Utah's largest export market, Fabi noted. While the COVID-19 pandemic created issues across many industries and led to a significant increase in the cost of lumber, he said the increased tariff will only increase costs. Canadian exports of lumber to the U.S. have already been declining over the past few years, he said. The issue is that the U.S. does not produce enough lumber to fulfill all its needs — contributing to the cost increases.

Fabi said while manufacturers pay the tariffs, they affect anyone who wants to buy wood due to rises in price.

"Because at one point it becomes hard to export when all these duties are imposed and are limiting the freer flow of goods," he said.

He added that Canadian leaders hope to negotiate with U.S. leaders to come to a resolution that will help both countries before the tariffs become final.

Fabi expressed optimism the two countries will be able to resolve their issues, as they did during the pandemic.

"Both our administrations were able during COVID to sit down and find constructive ways to maintain the border for our supply chains, for business and essential workers both countries to be able to cross the border and work in essential sectors," he said.

"So we can and have, and we continue to do work together and do it better than anybody else as two trade, cultural and societal partners," he added.

The consul general described his meetings with state and business leaders, including Lt. Gov. Deidre Henderson, as productive, and he hopes to continue to visit Utah in the future and promote trade between the state and his country.

"I'm a foreigner in your state, so I come here and I see extremely beautiful environment, I see very kind, open-minded, hard-working people," he said.

Related topics