SAN JOSE, Calif. - Countervailing duties on plywood and softwood, tariffs on steel and aluminum are "having a profound impact on U.S. cabinetry manufacturers," says John Sherwin (left), a researcher with Freedonia Group.
After a 20.83 tariff was imposed on on Canadian softwood imports in November 2017 (including pine, spruce, and fir), softwood lumber prices jumped, and they have remained high since. Longer-term anticipated results include:
• an estimated 7% increase in the cost of new home construction in the U.S. (according to the National Association of Home Builders)
• surging profits for U.S. lumber producers.
In May 2018, the Random Lengths Framing Lumber Index hit the highest level since its inception in 1995, rising 30% from the previous year. (It has since lowered but not to pre-peak levels.)
Despite the price rise, supply was not impacted, and in a May 2018 survey, 31 percent of single-family homebuilders reported a framing lumber shortage. "These additional costs are leading prospective home buyers in the U.S. to either postpone construction, opt for a smaller home, or buy an existing home instead of building," Sherwin says. He will be presenting resuilts
The issue is still in flux, as the United States continues to bargain with China on trade. In early December, President Donald Trump and Chinese President Xi Jinping agreed to 90-day halt of a tariff increase from 10 percent to 25 percent on $200 billion worth of Chinese exports.
The deal postponed a March 1 deadline for a new round of tariffs that would have be levied on oak, beech, maple, ash, cherry, moldings, rods, particleboard, various types of plywood, doors, charcoal, corks, and stoppers, and wicker and bamboo baskets. Furniture items include bedding, mattresses, car seats, wood chairs, furniture designed for offices, kitchens, chandeliers, and lamps.
However until it is resolved, the effects transcend housing construction alone, with remodelers and manufacturers of flooring, cabinets, and related building and construction products purchased by both professionals and DIYers worried about the longer-term effects. For example, consumers may not be as willing to finance lumber-intensive home renovations given the higher costs.
Not only wood is affected - but raw materials for hardware as well, as steel and aluminum tariffs also carry significant implications for the U.S fasteners industry, which is an intensive user of foreign-made steel and aluminum. Because fastener companies primarily compete on the price of raw materials, US companies could lose share to foreign concerns as import costs for these metals continue to rise, or in some cases even go out of business.
Kitchen Cabinets Factory in Vietnam