The Commerce Department last month doubled levies imposed in 2017 on Canadian softwood lumber to 18%. They stem from decadeslong complaints by U.S. producers that Canadian exports are subsidized. National Association of Home Builders Chairman Chuck Fowke said the tariff increase would “put upward pressure on lumber prices and make housing more expensive,” noting home builders are already grappling with rising construction costs and lumber prices significantly above pre-pandemic levels.
The Biden administration in June banned imports of some solar-panel materials from China’s Xinjiang region, a major producer, over the alleged use of forced labor there. As a result, the price of polysilicon, a key solar-panel ingredient, surged to more than $20 a kilogram in the second quarter of 2021, versus $6.20 a year earlier, according to Wood Mackenzie, a research company.
“The [policy] uncertainty is having a very big impact on the availability and pricing of products,” said Abigail Hopper, chief executive of the Solar Energy Industries Association, which represents solar-panel installers.
The Biden administration also is seeking to bring back supply chains for some critical products such as semiconductors, pharmaceuticals and rare-earth minerals, while proposing to accelerate a requirement for federal agencies to procure more American-made products.
“Biden has not only continued Trump’s trade policies but has amplified them with stricter ‘Buy American’ provisions, local content requirements and pro-union proposals on electric vehicles and batteries in the new spending bills,” said Gary Clyde Hufbauer, an economist with Peterson Institute for International Economics. He estimates those measures implemented by the Trump and Biden administrations might add half a percentage point to U.S. inflation over the period affected by the policies.
Meanwhile, economists at JPMorgan Chase & Co. estimate the U.S. immigrant population this year is about three million lower than if pre-2017 immigration trends had continued. Domino’s Pizza Inc. CEO Richard Allison said on an October earnings call that lower immigration in recent years had contributed to the pandemic-driven shortage of labor, particularly drivers, which had added to costs and increased delivery fees. “In a country whose population is not growing as it used to, we, in our industry and a number of others, will need more immigration…to continue to have a robust workforce,” he said.
Many U.S. companies have pushed the administration to ease tariffs to reduce their costs, such as on children’s shoes, steel and aluminum. The U.S. Chamber of Commerce has asked it to raise the cap on immigrant visas.
But economists say the shift of supply chains back to the U.S. could have a longer-lasting impact than tariff changes, coming at a time when restrictive immigration rules and baby boomers’ retirement keep the U.S. labor market tight. “That could mean a longer term change in inflation dynamics because you’ve just shifted more power to domestic workers,” said MIT’s Ms. Forbes.