By: The Working Forest Staff
CNBC — The trade war with China has caused a steep drop in U.S. exports of the product, and now the industry is cutting jobs.
China used to account for about half of all U.S. hardwood lumber exports, about $2 billion annually. The Trump administration’s 25% tariff cut through that demand.
According to a report by CNBC, in the 12 months since tariffs on U.S. hardwood were announced in July of last year, lumber exports to China were down $615 million compared with the previous year, according to the American Hardwood Export Council. In June of this year alone, when the full tariff rate went into effect, trade volume to China was half what it was a year ago.
“The American hardwood industry is facing a watershed moment in China. As political and commercial ties between our two countries continue to deteriorate, our industry is caught in the middle of a fight with a country that has been our largest market for a decade,” wrote Tripp Pryor, international program manager at the council, in an August report. “The real long-term danger here is that we are losing market share that will not easily be won back.”
Hardwood is used for things like flooring, furniture, cabinets, and doors, while softwood is used in framing and other building materials.
Workers at Northwest Hardwoods’ mill in Mount Vernon, Washington, don’t have much time left on the job. The mill is set to be shuttered in November, and all 70 jobs gone. The Tacoma, the Washington-based company, which is one of the largest producers in North America, is also closing a plant in Virginia, cutting an additional 30 jobs, and is then laying off 30 more at the corporate level.
China was its No. 1 export customer. Northwest Hardwoods’ CEO said the tariffs were just too much too fast.
“We saw an immediate response from Chinese buyers,” said CEO Nathan Jeppson. “Our business, much like the rest of the industry, is highly dependent and has forged a large relationship selling into the Chinese market, and since the middle of last year, if you just look at year on year, sales are off 43% in total exports to China.”
Jeppson attended the National Hardwood Lumber Association Conference in New Orleans this week, where there was plenty of tariff talk.
“This is a pretty depressed group. This is a pretty challenged industry. We’ve survived a lot of things and a lot of downturns and shown resilience,” he said. “I’m confident that we’ll do so again, but right now this is as scary as it’s ever been for some who’ve been in this industry for their entire careers and often in multigenerational families.”
While his company has a large enough footprint to survive, he says it may end up smaller on the other side of this downturn. Other single-mill operations, largely family-owned, will close their doors permanently.
Ironically, China actually saved the American red oak business in recent years. As it fell out of fashion in the U.S., the industry marketed it hard in China, and now it’s the favorite there. Unfortunately the Chinese are now going elsewhere to find it.
“Instead of buying from the U.S., which is the most sustainable forestry institute in the world, they’re buying from places like Russia and Central Africa and Southeast Asia, many of which are known bad actors in terms of illegal harvesting, deforestation and the like,” said Jeppson.
Those countries are now doubling their market share, he added.
“The hardwood lumber industry has received more than $5 million through the USDA’s Agricultural Trade Promotion Program, one leg of the President’s Support Package for Farmers,” a U.S. Department of Agriculture spokesperson said. “However, lumber trade jurisdictionally falls within the Department of Commerce and so the Department of Agriculture is not providing additional assistance beyond trade promotion to the sector.”
The Commerce Department referred requests for comment to the U.S. Trade Representative. The USTR did not immediately respond to a request for comment.
The White House did not comment.
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