How do Trade Policies Affect a Newly Construction Home?

In terms of constructing a new home, trade policy plays a vital role. The Ex U.S. President Donald Trump has a keen interest in the United States trade policy. At the same time, the home shoppers may wonder how international trade policies may affect the price while constructing newly built homes.

You should not neglect the trade since it is the most significant factor that determines the price of the quality of any new home.

Additionally, it can directly affect the quality of the material, residential appliances, price, home decor products, etc., which are imported from other countries. For example, the furniture or window drapes, drywall, clothes washers, and refrigerators.

Gary Hufbuer says, “buyers should certainly be aware of how a trade might impact their home purchase.” But, he also added, “a house is a huge ticket item, the impact of trade on it is dwarfed by land costs and the labor component of construction, but there are components that are affected by trade.”

Lumber Disputes

Lumber softwood is one of the top listed affected items that is produced in the United States while imported from Canada. Generally, it is used inside the wall of the newly built home, and it makes two-by-fours.

Hufbauer says, “Canada and the United States have been at loggerheads over the softwood lumber trade” for more than a century”.

But Canadian companies are dumping subsidies on the U.S. market, which result in the loss of revenues, and sales at the same time; – it is claimed by the U.S. lumber producers.

For the USA, imported lumber is cheaper for buyers and homebuilders; it is difficult to pinpoint the exact amount of savings since the currency exchange rate fluctuations.

A public policy analyst at the Montreal Economic Institute, Alexandre Moreau, said in September 2016, “the USA softwood lumber paper consumers are affected by a 2006 agreement between the United States and Canada. The institute is a nonpartisan, not-for-profit research organization in Quebec.”

Moreau also stated, “for the residential construction on the American market, the lumber is targeted.” However, within 2017 the lumber has become more costly, said Random Lengths.

Looking Forward

New homes will continue to rise. It is difficult to predict whether the costs of softwood or other materials are used to build or furnish. The Trump Administration hasn’t announced a specific trade policy agency which is one of the biggest reasons.

Trump also mentioned that he would fix the trade issues with the big trade deals, but he didn’t take any movement about it. And it was a very cloudy agenda at this moment.

Hufbauer added again that “the tax on imported goods is so-called trade wars with China or Mexico, increasing the prices of imported furnishing or home appliances.

But at this moment, the tariffs are pretty low, and trade is pretty free. But all those prices are going to go up if we go into a huge protectionist binge.

Other Options

The other option for buyers or builders could be either foreign or domestic. The USA builders held a discussion with the lumber companies in September 2016. And in that statement, NAHB CEO Jerry Howard mentioned that – the group supports opening up the competition in the U.S. lumber market since it benefits the U.S. homebuilders and buyers.

But not everyone agreed with his statement. However, during the election campaigns, there’s a need for some of the import tariffs, – said Tom Page, the Vice President of iStar.

At the same time, he also points out that home building costs can arise for various reasons. It’s not only trade policy but also the strong U.S. economy for the demand for newly built homes.