President Donald Trump announced steep tariffs on imported lumber and wood products, which his administration says are necessary to protect the US economy and encourage domestic manufacturing. Starting October 14, softwood lumber will be subject to a 10% tariff, while kitchen cabinets, bathroom vanities, and other finished wood products will be subject to a 25% tariff that will increase in January.

The biggest hit will be Canada, the largest US lumber supplier, whose lumber exports are already subject to separate tariffs totaling 35.19%. The two countries have been embroiled in a decades-long dispute over US claims that Canada unfairly subsidizes its lumber industry and sells the commodity below market value.

US homebuilders and retailers warn that higher costs could push up home prices and furniture costs as the trade dispute over lumber products re-escalates. Here's what you need to know.

English: On September 29, Trump announced a 10% tariff starting October 14 on imported softwood lumber and sawnwood, as well as a 25% levy on kitchen cabinets, vanities, and other wood products. In January, the tariff on kitchen cabinets and bathroom vanities will increase to 50% and on upholstered furniture to 30%.

The tariffs follow a Commerce Department investigation launched in March into the national security impact of imports of lumber and related goods. The Section 232 investigation determined that "the current volume and nature of wood product imports are weakening our economy," leading to mill closures and supply chain disruptions, according to a White House statement.

Trade groups representing American industries, including the U.S. Lumber Coalition and the American Kitchen Cabinet Alliance, said the measures would boost domestic manufacturing. The president has previously used Section 232 to impose tariffs on other goods, such as steel and aluminum, and other investigations are ongoing. (alg)

Source: Bloomberg