Drone video shows widespread flooding in Kinston, NC following Hurricane Florence
The tariffs President Trump has slapped on imports from foreign countries — including duties on $200 billion of Chinese goods announced Monday — are almost certain to raise costs on homeowners in the Carolinas hoping to rebuild and refurnish after Hurricane Florence.
While prices naturally rise after a natural disaster, given the spike in demand for building materials, Trump’s trade war has already boosted costs for imported plywood and lumber, which jumped 30 percent in the six months after the Trump administration announced tariffs on Canadian softwood timber in December.
In addition, Trump’s tariffs on Chinese imports have boosted prices for furniture, washing machines and other appliances, and the president late Monday announced an additional 10 percent tariffs on a range of Chinese exports, which could increase to 25 percent by the end of the year.
“People should expect to find it will be more expensive to rebuild and refurnish their houses,” said Jock O’Connell, a trade economist affiliated with California-based Beacon Economics. “Whenever there’s a natural disaster, there will be spikes in prices, as demand goes up. This time it will be exacerbated by the impacts of tariffs.”
Homeowners confront an array of challenges rebuilding from the hurricane, including labor shortages and lack of insurance to pay for any rebuilding and losses. But higher costs for building materials and household items will add to those costs, said O’Connell and representatives of the building and retail industries.
Michael Carpenter, executive vice president of the North Carolina Home Builders Association, said U.S. duties on Canadian lumber caused home construction prices to spike sharply in the first half of the year, and then drop off in recent months. Hurricane Florence will help restore those higher costs, he said, in part because of the challenge of moving construction materials around.
“The disruption are going to be substantial, and in a lot of areas around the state,” said Carpenter. “There are are going to be some significant shortages of building materials for some time.”
Mark Adkison, a vice president for the International Housewares Association, said his trade group is most concerned about tariffs the Trump administration announced Monday on $200 billion of Chinese exports, which could rise from a 10 to 25 percent tariff by 2019. The proposed list subject to duties is broad and sweeping, affecting everything from gypsum used in sheet rock to electronics, textiles and everyday housewares and kitchen gadgets.
“The 25 percent proposal is really concerning,” Adkison said. “It is more than the supply chain can handle, and would result in significant price increases at retail.”
Trump and Commerce Secretary Wilbur Ross have enacted a series of tariffs against top exporters to the United States, including China, Canada, Mexico and the European Union.
The administration says these tariffs are aimed at protecting U.S. farmers, manufacturers and other companies that have been victims of foreign protectionism. But they’ve raised prices for consumers and various U.S. companies, including those that depend on foreign supply chains, and have hurt U.S. farmers and other exporters that have been subject to retaliation.
In a series of tweets early Monday, Trump acknowledged his tariffs have caused price hikes, but claimed those cost increases have “thus far been almost unnoticeable” and “put the U.S. in a very strong negotiating position.”
“For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies,” Trump said in his statement Monday, announcing the new duties.
Plywood and drywall are two key building items that could face further price spikes, if the trade war intensifies.
China continues to be the leading supplier of plywood to the United States, despite U.S. tariffs on a range of Chinese wood products last year.
In 2017, U.S. companies imported $1.14 billion in plywood from China, or 41.6% of all plywood imports that year. Through July of this year, imports from China have been down 14.5% from the same period last year, according to O’Connell, citing U.S. Census Bureau trade data.
Some U.S. companies will likely benefit from these tariffs. Weyerhauser, a major landowner and employer in North Carolina, has benefited from higher wood prices, as have other U.S. timber interests. But U.S. building interests have railed against the tariffs.
A study by the National Association of Home Builders estimated that higher lumber costs since 2017, largely because of Trump’s tariffs, have been enough to drive up the price of an average new single-family home by $6,388.
Hurricane Florence potentially could end up damaging 759,000 homes in the Carolinas and other states and cost more than $170 billion in rebuilding costs, according to a pre-storm estimate by CoreLogic, a real estate data firm. While demand for construction materials will soar after the hurricane passes, that demand could be tempered by the fact that many homeowners lack adequate homeowner insurance and federal flood insurance, said O’Connell.
Because of widespread flooding, Florence is likely to spike consumer demand for basic household items, he said. “Furniture, lamps, chairs carpets. All of those will have to be replaced,” he said. “But if you go to Home Depot or Ikea, the price of these things will go shooting up.”
This story has been updated with confirmation of President Trump’s latest tariffs on China, announced late Monday.