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News » US » Housebuilders warn of ‘looming $1bn tax on housing’ » published 30 Jul 2018

Housebuilders warn of ‘looming $1bn tax on housing’

President Donald Trump’s proposed 10% tariffs on US$200bn-worth of Chinese imports would represent a US$1bn tax increase on residential construction, according to the National Association of Home Builders (NAHB).

In its blog, NAHB says that the proposed tariffs could have major ramifications for the housing industry. Nearly 500 products used in residential construction are included in the proposed imposition; NAHB refers to the plan as a “looming $1 billion tax on housing”.

Of the planned US$200bn in tariffs, NAHB economists estimate that US$10bn of goods used by the home building community would be subject to the 10% levy. “Put another way, if the tariffs take effect, this would represent a $1 billion tax increase on residential construction,” said the organization.

“Keep in mind that this tax increase would come on top of the current 20% tariffs on softwood lumber imports from Canada,” said the NAHB. Since the beginning of last year, lumber prices are up more than 40% due in large part to the tariffs, and this higher cost has added several thousand dollars to the price of a typical single-family home.

“This is why it is absolutely imperative that the Trump administration resumes talks with Canada to find a long-term solution to this trade dispute that will ensure American home builders and consumers have access to a reliable supply of softwood lumber at reasonable prices.”

NAHB added that, at its urging, 171 House members have sent a letter to the administration urging the US to re-start softwood trade negotiations with Canada.

“NAHB continues to urge the administration and Congress to oppose tariffs and to resolve international trade disputes in a manner that won’t tax American workers and consumers,” it said. “We are also continuing to work on all fronts to find solutions that will ensure a lasting and stable supply of lumber imports into the United States at a competitive price.”

US trade representative (USTR) Robert Lighthizer had released a statement on 10 July regarding action under Section 301 of the Trade Act of 1974; public hearings were held last week. In his statement, Lighthizer said: “On Friday, in response to unfair Chinese practices, the United States began imposing tariffs of 25 percent on approximately $34 billion worth of Chinese imports. These tariffs will eventually cover up to $50 billion in Chinese imports as legal processes conclude. The products targeted by the tariffs are those that benefit from China’s industrial policy and forced technology transfer practices.

"China has since retaliated against the United States by imposing tariffs on $34 billion in US exports to China, and threatening tariffs on another $16 billion. It did this without any international legal basis or justification.

“As a result of China’s retaliation and failure to change its practices, the President has ordered USTR to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports. This is an appropriate response under the authority of Section 301 to obtain the elimination of China’s harmful industrial policies. USTR will proceed with a transparent and comprehensive public notice and comment process prior to the imposition of final tariffs, as we have for previous tariffs."

 

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This article was published on 30 Jul 2018 (last updated on 30 Jul 2018).

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