Builders Hope for Tariff Reprieve

LOS ANGELES-Thousands of multifamily builders are hoping for a miracle today, after the Bush Administration announced plans to support a measure pushed by Democrats and Republicans alike that would slap stiff tariffs on lumber that’s imported from Canada even though it may exacerbate the nation’s affordable-housing crisis.

The Bush Administration announced the 19.3-percent tariff on Canadian softwood lumber on Friday, saying that Canada has unfairly been subsidizing its logging companies for years. Bush has been under pressure from Democrats in log-producing states, and from some Republicans, to levy the new import taxes in an effort to save logging jobs in the US.

Most apartment and single-family builders hate the idea of levying new import taxes on Canadian lumber, saying it will undoubtedly force the cost of building a home higher. Researchers at the National Association of Home Builders in Washington, D.C., say the 19.3% tax increase will add about $1,000 to the construction cost of each new housing unit.

An even bigger round of tax increases could come next month. On Sept. 24, the Bush Administration is expected to rule on a separate complaint by US lumber producers that Canadian companies have illegally been dumping wood at below-market prices.

“We are certainly not happy about this,” says Michael Carliner, NAHB’s chief economist. “We are hopeful that in the final ruling, this tariff level will be reduced.”

Bruce Smith, NAHB’s president and a California builder, says the association hopes that either Bush will have a last-minute change-of-heart or that Congress will intervene before the Commerce Department begins levying the new tariffs on its scheduled Aug. 20 date. If the new tax can’t be stopped before then, builders will have one last shot at reversing the penalties before Commerce issues its final ruling on both the subsidy and dumping cases in December.