U.S. moves to double tariffs on Canadian softwood lumber

• The U.S. Commerce Department says it will seek to double tariff rates against most Canadian softwood lumber producers, raising the combined duties for most firms to 18.32% from the current 8.99%, despite current record high lumber prices.
• The Globe and Mail reports Resolute Forest Products (NYSE:RFP) and Canfor (OTCPK:CFPZF) would face even higher duties of 30.22% and 21.04%, respectively, while West Fraser Timber (NYSE:WFG) has a preliminary new rate of 11.38% vs. 8.97% previously.
• Other potentially relevant tickers include MERC, OSB, OTCPK:IFSPF
• ETFs: WOOD, CUT, NAIL, XHB
• The proposed rates are subject to further review over the next six months before final duties are set.
• Two-by-fours made from Western spruce, pine and fir reportedly sold last week for a record US$1,640 per 1,000 board ft., surging 340% over the past year.
• Despite the past week's pullback, Janney analyst Tyler Batory thinks "higher lumber prices are here to stay" because of a supply/demand imbalance.

Comments

[AbolishtheFed]

Biden is getting paid off as usual. The big cities are emptying out and losing their tax base. The only way to keep them is to make new houses so expensive that even rising taxes can’t hold them hostage.

This is the end of the radical left. I miss Bill Clinton, never thought I want that freak to come out of retirement.

[joesmith323]

to the author - OSB has been merged with West Fraser Timber and is no longer an independent ticker.

[Chart Rider]

What is the point of higher lumber tariffs? Does Biden want to cut down all the trees in Delaware, or what?

[joesmith323]

@Chart Rider The point is for American consumers to pay higher prices for lumber and pipeline the money into the pockets of American sawmill and timberland owners.

[Victor Justice]

@joesmith323 Maybe you should invest in some lumber stocks instead of complaining.
Long WFG...

[joesmith323]

@Victor Justice I am long West Fraser. I had some Norbord and got West Fraser as a result of the merger. I live in a part of Canada that depends heavily on the lumber industry so the tariffs hit my community. There is the larger issue that it is bad for Canada generally that the American Department of Commerce feels free to make up bullshit and then seek to bully Canada to appease American special interests.

[Unbeliever]

So this will keep new house prices high or even higher. Bad for home buyers and good for US lumber companies. Don't understand the logic in this unless the lumber lobby is working overtime buying politicians.

[mattgrim81]

WTF is the point of free trade if the Americans constantly ignore it putting additional tariffs on lumber steel and whatever else they feel like. Screw it Canada should stop selling them all that cheap heavy crude they need since they haven't been able to get it from Venezuela or Mexico anymore. Put it on tankers and sell it to Japan Korea and China for a premium and put tariffs on every American product that competes with Canadian industries.

[AbolishtheFed]

@mattgrim81 typically there are reasons like maintaining an industry in the U.S. so the ability to perform this function isn’t lost.

If we look at the Chip Shortage, this has sparked maybe $30 billion in new construction for chip foundries in the U.S. because our industry is too weak.

But I agree Bidens timing on this is absolutely moronic. Lumber prices are too high, up 350%, and this will not help anybody. If lumber falls down by half or a third, then the industry may be able to handle it and people won’t suffer.

But a side note, maybe Canada should not look to exporting to the U.S. for its survival? Maybe they should become more self sufficient and develop an economy that doesn’t rely upon the U.S. and our deficit spending model for them to be OK. What if we go into another deep recession like in 2008/9, Canada is screwed. Very short sighted.

[joesmith323]

@mattgrim81 Canadian NIMBYs are fighting tooth and nail against construction of pipelines that would allow us to export oil and gas. The NIMBYs even blocked Energy East that would have allowed Canada to use more of our own oil.

[Pretired]

@mattgrim81 Canadians don't like pipelines so they can't get that heavy oil to their coast. That is why they don't sell heavy oil on the world market as you suggest. While USA is in midst of Lumber shortfall, the timing of the usa tariff increase seems wrong...but if you want free trade, then Canada could drop their restrictions on importing Dairy from USA. I don't think Canada is without tariffs. Canada could also step up and start importing some of the thousands of poor Hondurans that are streaming into USA.

[PatentMan]

Simply an attempt by the greedy US fed gov to take advantage of high lumber prices and buy “calls” that pay off if lumber falls. Focus on the timing. US feds betting lumber will fall in 6 months AND they believe consumers can handle paying high lumber prices. So US feds say, let’s Jack up tariffs cuz consumers will neither notice nor care.

[RickcarinoNYC]

I thought 2x4x8 are also available as metal studs. So stop complaining and use green recyclable metal studs. Less ply will be needed if we use Cinder blocks for first floor like in Florida, lot more stronger. Think alternatives where available.

[Chart Rider]

@RickcarinoNYC Need to get FBRKF to the US.

[64MGB]

@RickcarinoNYC -Termite proof too.

[AbolishtheFed]

Wait for hurricane season. Plywood will not be available.

According to my sunspot theory, this will be an active season with the mid Atlantic seaboard as problematic. The lack of sunspots reduces upper level shear and will allow storms to form easier.

Even though the sun and water are cooling, it won’t be enough.

You heard it here first.

[Invest In Texas]

@AbolishtheFed Good point. Insurance premiums will be fun to watch for anyone living on the east and Gulf coasts if what the weather experts are predicting.

[AbolishtheFed]

@Invest In Texas the government will control premiums, the insurance companies may take a beating. Florida is a battleground state, they don’t want us angry. Lol

[Chart Rider]

@AbolishtheFed pretty sure the water isn’t cooling

[rambler1]

How does that make any sense? Sounds like the lumber lobby has is in bed with somebody.

[Invest In Texas]

@rambler1 Of course they do. Someone is always doing a little pillow talk besides Mike Lindell. 😁

[Alan Loeb]

@rambler1 Will be interesting to read how Pelosi, Schumer, and the rest of the Democrat insider-traders played this as Americans trying to build houses suffered.

[pman62]

hot damn.
gonna see the same thing with the housing market as the used car market....

lumber prices keep going through the roof = new houses more expensive, or put on hold = shortage = used houses go up in price because 'relatively cheap' compared to new houses.

= giant clusterfucc

[Invest In Texas]

@pman62 Housing bubble has just begun and it's going to be a bigly one when it implodes.

[bluegreen 33]

Gotta keep those lumber prices high or higher. I just paid 13 dollars for
a 2x4x8 at the local lumber yard. Maybe it's 20 dollars next year?

[Invest In Texas]

@bluegreen 33 I was in a Home Depot a week or so ago and saw the price for a sheet of 4x8 7/16 OSB. My jaw dropped. $55-$60 per sheet. T&G higher, zip wall even more. People forget that sheet goods have more than doubled as well. Of course concrete, insulation and drywall increased as well
Those are always the 4 main categories that rise in construction. Everyone jumps on board.Crazy times.

[joesmith323]

@Invest In Texas We had some shares in Norbord. It merged with West Fraser Timber so now we have shares in a Canadian company that has sawmills and OSB plants on both sides of the border.

[Invest In Texas]

@joesmith323 👍

[Dividend Growth Jedi]

Why? Asking seriously.

[AlexS]

@Dividend Growth Jedi This administration wants more money from all sources to pay for its plans to give money to whom it wants.

[Alan Loeb]

@AlexS Yes, to its tributaries.

[Bikeboatski]

Seems like a bad move! Administration supports lower interest rates, which encourages more home buyers. And yet they encourage a move like this, which drives home prices still higher and discourages buyers. Seems like they're working against themselves? Unless main objective is really more money for the tax coffers?

[Peterso21]

How does this affect lumber stocks? RFP in particular. Would think this keeps prices high

[mattgrim81]

@Peterso21 bad for Canadian lumber stocks obviously they gotta pay more to send there products to market. But good for American producers since they don't have to pay tariffs.

[joesmith323]

@mattgrim81 I think that both West Fraser and Canfor have sawmills in the USA.

[Contemplating Retirement]

This is a proposal.

IMHO , will never happen. But , for everyone , time will tell.

Author has spurred some debate. Which is very excellent.

Nothing else imho.
Glta

[Invest In Texas]

@Contemplating Retirement Everytime a tariff is implemented or raised it gets priced into the cost of goods and just gets passed on the end consumer. Worthless. Bring back the SLA that expired in 2015.

ustr.gov/...

www.cbp.gov/...

www.vancouverislandfreedaily.com/...

[ofirm]

@Invest In Texas keep in mind that for companies like RFP, they can
ship the wood and cut it in the u.s. since uncut timber is less than
$350 and the final product is > $1200, they have more than enough
incentive to move wood to their mills in the south and cut them there.

[Invest In Texas]

@ofirm Rail costs, Transportation time and double handling to seem to make that very efficient imo.

[64MGB]

Remember, the administration's stated goal is carbon reduction.
Unaffordable housing = more apartment dwellers = more government control.

Next step vehicles too expensive to own. Voila',

[AbolishtheFed]

@64MGB to stop the exodus from the cities to maintain Democratic strongholds because city dwellers are so dependent on government?

Hmmmm. Maybe.

[AbolishtheFed]

Wow, Joe is trying to ruin relationships with all our trading partners…. Sorry, just imitating anti-trumpers from a while back.

This move seems to be an effort to keep inflation high. I’m not opposed to tariffs, but is Canada dumping lumber? Or is this part of a bigger effort to hurt the American consumer? I’m sure it isn’t a move to increase U.S. lumber production since prices are maxing out due to supply issues.

What is the reason behind this move?

[ttims2]

@AbolishtheFed all this does is raise tariffs back (actually lower) than they were before orange menace lowered his own tariffs in December

[AbolishtheFed]

@ttims2 I miss Trump, stable genius. Saw inflation coming, realized he had to adapt.

There is nothing wrong with changing your mind as the market changes. Maybe Joe will change his demented mind in a bit.

Of all the things Biden’s lost, he misses his mind the most.

[mattgrim81]

@AbolishtheFed Trump did the same illegal shit when he put tariffs on Canadian steel saying it's a national security issue. All it did was drive up the price Americans paid and bottom line was American consumers paid for it and they will with lumber to.

[dividendinvestor10]

As in many cases, a reader gets useful information, or at least a better background, by reading some informed comments on SA.
Upon reading this headline my immediate thought was "might be selling my RFP holdings on Monday". But then, RFP is up 4% two hours after this announcement. How is this good news for the company?

[AndreP]

@dividendinvestor10 I had the same thought with my MERC shares. They are going down so I might take my profits.

[ofirm]

@AndreP these guys will maximize their u.s mill capacity and pay tariff
on the low cost raw timber coming in. they will u.s Canadian mills for
overflow and non u.s sales. the tariff keeps prices high and they win.

[AndreP]

@ofirm Good point, unfortunately, MERC has no U.S. mills to my knowledge.

[frogmaier]

so the "goal" i to use more US lumber........i can just see the left complaining
about housing prices and the "need" for UBI and more handouts.
build MORE houses that people can AFFORD to Buy!!!

[Invest In Texas]

@frogmaier There is anywhere close enough of U.S. SPF production to satisfy a 1/4 of the demand right now. The Canadian lumber industry is subsidized by the government.

[joesmith323]

@Invest In Texas "The Canadian lumber industry is subsidized by the government."

That is unlikely. Even if there is a "subsidy" somewhere in the system it does not increase the volume harvested and hence does not affect the volume or price of lumber going across the border. If there is a "subsidy" here in British Columbia, the money is going into the pockets of mill workers.

[ofirm]

@Invest In Texas the only subsidy is the crown lands with very low
royalties. I doubt that equals 30% or even 10% royalty, but who knows.

[Longbottom]

More bad decisions. Unnecessary tariff when we should be using more clay for home construction, not wood.

[64MGB]

@Longbottom - I suggest straw it's much cheaper and the b.b.wolf likes it better too.