Wednesday, April 26, 2017

If you're looking to build a home, Squirrel-Hair just made your project considerably more expensive

Today's exhibit in the ongoing flood of evidence that the current president has no consistency to his worldview, no ideological core that guides him, comes in the form of action on one of his most harmful impulses: protectionism.

Perhaps you've heard about the tariffs to be imposed on Canadian lumber.

Mark Perry of the American Enterprise Institute explains why this harms far more people than it helps:

There are a lot of news reports today about Trump’s decision to impose stiff tariffs on American companies (homebuilders) who buy Canadian lumber, here is a sample: “Trump slaps first tariffs on Canadian lumber,” “Tariff on Canadian lumber sends a stern message,” “Trump Administration To Impose 20 Percent Tariff On Canadian Lumber,” and “Trump slaps duty on lumber from Canada.” In each case, those news reports miss a few very critical points: a) Canadian lumber doesn’t pay the tariff, b) Canadian lumber companies won’t pay the tariff, and c) American lumber-buying companies (mostly homebuilders) will pay the tariff, which will be passed along to home buyers in the form of higher new home prices. Therefore, it’s more accurate to report that Trump has just slapped stiff 20% tariffs (lumber taxes) on the American peoplenot Canada.

And the phrase "far more people" can be quantified:

Tariffs on imported lumber might help protect, save or create jobs in one US industry (lumber producers), but will destroy more jobs in other US industries (construction in this case). Update: There are about 32 construction workers employed in homebuilding (5 million) for every one worker employed in logging (50,800) and lumber and wood production (105,900) combined.
And resulting effects don't take long to manifest themselves:

Update 1: From a statement today from the NAHB:
The National Association of Home Builders (NAHB) today denounced the decision by the U.S. Department of Commerce to impose a 20% countervailing duty on Canadian lumber imports, saying it will harm American home buyers, consumers and businesses while failing to resolve the underlying trade dispute between the two nations.
The trade agreement that has governed Canadian imports of softwood lumber since 2006 effectively expired at the end of 2016. Uncertainty surrounding a new trade pact is the primary catalyst for the 22 percent spike in the Random Lengths Composite Price Index for lumber since the beginning of the year.
These price hikes have negative repercussions for millions of Americans. It takes about 15,000 board feet to build a typical single-family home and the lumber price increase in the first quarter of this year has added almost $3,600 to the price of a new home.
Additionally, the NAHB estimates that 8,241 full-time housing-related jobs(mostly construction) will be lost as a result of the new lumber tariffs.
Update 2: CNBC reports today that “Housing stocks take a hit from Trump’s lumber tariff“:
Homebuilder stocks fell on Tuesday on concern new tariffs by the Trump administration on Canadian softwood lumber imports will raise costs.

We're starting to see that DJT can gather all kinds of groupings of erudite and insightful people who can fill him in on the implications of various policies, but he is going to boneheadedly forge ahead with whatever he thinks is going to enhance his "winner" image in the eyes of his willfully ignorant base.

I really don't think he can see how a move like this is completely at odds with his very good plan to reduce corporate tax rates to 15 percent.

This is why those of us who strove to bring an alternative into actuality still will not engage in the tribalistic impulse to defend him as some kind of emblem of America's turning a conservative corner. If that is indeed the case, it is because of advisers, lawmakers and cabinet and agency heads, not the man at the top.

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