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Tariffs pose a threat to U.S. hardwood industry

The trade war with China, and possible tariffs against Mexico, has drawn sharp rebukes from the U.S. hardwood industry.

The industry has a heavy reliance on export markets for its survival and is being devastated by the ongoing trade dispute with China, according to the Hardwood Federation that represents 26 U.S. hardwood-focused trade associations, state forestry and lumbermen organizations.

“The hardwood industry is a fully integrated industry, from logging to manufacturing finished consumer goods like flooring, cabinetry, moldings, railway ties and many other products,” Dana Lere Cole, the federation’s executive director, said in a statement. “The ongoing trade dispute with China and the declared tariffs on U.S. hardwood products are serious threats to the viability of the industry, and the people it employs.”

In 2018, U.S. hardwood producers shipped products worth $3.9 billion to global markets; $1.9 billion to Greater China, including Hong Kong and Macau. As a result of the impacts of tariffs imposed in the fall of 2018, the U.S. had a trade surplus of $1.293 billion in hardwood lumber, down from $1.475 billion in 2017.

Over the last three quarters, hardwood exporters lost $153 million per quarter, as a result of the 10 percent tariffs imposed by China. When the current tariffs increase to 25 percent, a steep acceleration of loses is expected, according to the federation.

“If these tariffs continue in this current application our logging and sawmill production will disappear as an industry sector, and the secondary jobs and manufacturing companies depending on loggers and sawmill operations will quickly follow,” said Cole.

In a May 16 article published in the Washington Post, Michael Snow, executive director of the American Hardwood Export Council, said the industry is looking for alternative markets. “But at the end of the day, there really are no other markets out there that can absorb anywhere near the volume that China was taking in,” Snow said. “If this continues for several months, I think there’s no question that we’ll see mill closures and layoffs in the industry.”

Cindy Squires, executive director of the International Wood Products Association, said the threatened tariff against Mexico will be felt from the border to the checkout line.

“Tariffs paid by U.S. importers, manufacturers, and ultimately consumers are not the way to address the crisis at the border. The initial five percent tariff proposed on Mexican imports will have negative repercussions across our industry and the costs will only increase if the tariffs continue to escalate as the President has proposed,” Squires said in a statement.

“Like all businesses, the wood products industry depends on economic stability and predictability to make critical investments and hiring decisions that contribute to economic growth in our communities. I am concerned that these escalating tariffs could undo much of the recent economic boom created in part by the Trump Administration’s tax cuts, deregulatory initiatives, and other business-friendly policies.” 

This article originally appeared in the July 2019 issue.

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