COVID-19 managed to do quickly what our anti-trade protectionists have tried to do slowly: deprive American consumers of inexpensive imports.
COVID-19 managed to do quickly what our anti-trade protectionists have tried to do slowly: deprive American consumers of inexpensive imports.
I f you ever have built a house, then you have probably experienced delays, cost overruns, a few unreliable subcontractors, and sundry other hassles. One thing you probably have not experienced is thinking to yourself, “Gee, I wish this were a lot more expensive!”
President Biden has heard the complaints that homeowners are not making, and has come up with an ingenious scheme to make them poorer. It is a plan to make housing less affordable for millions of Americans while ingeniously maneuvering at the same time to make offices, stores, and other commercial real estate more expensive for American businesses.
Inflation apparently is not moving quite fast enough for the Biden administration.
A succession of American presidents, including President Biden’s immediate predecessor, have felt it necessary to protect American consumers from abundance and low prices, and our government has extended that protection to a great many critical products, among them lumber imported from Canada. Canadian lumber, our politicians insist, is too cheap, because Canada declines to impose cumbrous and unnecessary expenses on its producers, while the United States does. The vast majority of Canadian timber is harvested on Crown lands, meaning publicly owned lands, and the U.S. government believes that the Canadian government does not make this production expensive enough. As everybody knows, the story of American history is essentially one long chronicle of defenseless victimization at the hands of the domineering, all-powerful Canadians.
At the end of the Donald Trump administration, U.S. buyers of Canadian wood were subjected to a punitive sales tax of 9 percent. Biden intends to raise the tax to 18 percent. In practical terms, that will add $100 in extra expenses to every 1,000 board-feet of Canadian lumber, or something on the order of a couple thousand bucks to the material cost of the wood framing of the typical American house. Eliminating those tariffs entirely would spare builders from their current burden — paying $5 for $4 worth of wood.
Making housing more expensive is a funny thing to do for a guy who has purported to put affordable housing at the top of his agenda and who proposes to pour billions of dollars into affordable-housing programs.
According to his own campaign agenda, Biden is “committed to using every tool available in government to produce more affordable housing supply as quickly as possible, and to make supply available to families in need of affordable, quality housing — rather than to large investors.” In fact, he is doing the opposite, using every tool available in government to make construction supplies — and hence the cost of new housing — less affordable as quickly as possible, and is doing so precisely at the behest of “large investors,” in this case, investors with a big interest in the lumber business.
It is true that many U.S. producers have trouble competing with more efficient Canadian producers. In Canada, it is relatively easy to harvest timber from public lands; in the United States, getting permission to cut down a tree on federal land is only a little less difficult than getting permission to sell Wild Turkey in an elementary-school cafeteria. Production on public lands in the United States has collapsed since the 1990s, almost entirely as a result of government policies. A bevy of other taxes, regulations, and mandates makes producing lumber in the United States more expensive than it needs to be, much as with many other businesses.
Notice the Biden administration doesn’t propose to make American lumber less expensive, but to make Canadian lumber more expensive. Making things less expensive requires work, innovation, investment, and intelligence, none of which is a strong suit of the Biden administration. But making things more expensive is easy — just lay a fat new tax on whatever it is, and you’re done.
Joe Biden ran as the anti-Trump but, as a practical matter, the great difference between Subcomandante Malarky and Tangerine Nightmare is that, on a couple of desks, at least, Trump had better help (you remember, those irrelevant National Review types: Kevin Hassett, Larry Kudlow, etc.) who could blunt the edge of the president’s native imbecility. Biden not only is doubling (literally doubling, Mr. President!) down on Trump’s economic nationalism but also is continuing the previous administration’s habit of running roughshod over international norms and institutions, in this case, the World Trade Organization, which already has ruled against the United States in its dispute with the . . . nefarious Canadians.
Protecting a country from trade — “autarky” — does not make it rich: Protecting a country from trade makes it North Korea.
Some of you who went shopping on Black Friday may have noticed substantially higher prices, or found that certain products you were looking for were not to be had at any price. Some of you experienced the same thing when shopping for your Thanksgiving dinner. You have heard about “supply-chain disruptions,” which have made it difficult to get the world’s splendid produce to the United States with the ease and plenty to which we have become accustomed. Another way to think of that situation is that COVID-19 managed to do quickly what our anti-trade protectionists have tried to do slowly: deprive American consumers of inexpensive imports. Tariffs are not the only factor driving up lumber prices, but they are making things worse, and the National Association of Home Builders calculates that rising lumber prices by themselves have added about $36,000 to the price of a new home.
Tell me, how are you enjoying that?