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Trade war with China hits the US hardwood industry

Publisher Fordaq | DATE 2019.09.29

Lumber mills in the U.S. have been a casualty of President Trump's trade war with China, as a significant dip in demand has pushed hardwood lumber prices down, the Wall Street Journal reports.

Many US hardwood lumber firms have seen reduced demand, and have had to make cutbacks and eliminate jobs. Gutchess Lumber, Baillie Lumber, and Northland Corp. all told the Wall Street Journal that demand has decreased from the same time last year.

Baillie and Northland have been forced to lay off workers. Gutchess reduced overtime and suspended 401(k) contributions.

China helped hardwood exporters during the 2008 financial crisis, writes WSJ, as Chinese customers kept buying oak and ash in large quantities. It remains the top export market, particularly for higher-grade wood like oak and cherry. Now, as the Chinese economy slows, US firms are feeling it.

Were we relying too much on East Asia and China? Of course we were,” Northland chief executive Orn Gudmundsson said. “But there were no viable alternatives.

The tariffs are polarizing. Northwest Hardwoods chief Nathan Jeppson and other executives believe they've been disastrous for the U.S. economy. Others acknowledge they're hurting right now, but believe they're necessary long-term. 67 percent of recently-polled Wisconsin manufacturing executives said they support the tariffs even though tariffs are hurting their businesses, WSJ reported.

The percentage of American hardwood exports to China dropped from a peak 54.19% in 2017 to 49.5% in 2018, according to the Department of Agriculture.

  • By this year, that number dropped to 41.34%.
  • As of August, lumber prices fell 20% from the previous year.
  • Other countries are reaping the benefits of the American market's downfall. Russia and Gabon now make up 17% of imports by value, up from 12% through July of 2018.

The Trump administration and Congress have met with industry leaders who are pushing for comparable assistance to what American farmers have received since the trade war began. But the Department of Commerce indicated it has no procedure for distributing such aid, according to the WSJ.

“There is no question that these tariffs have virtually destroyed a segment of our industry,” said Steven Anthony, president of Anthony Timberlands, told WSJ.

The Journal said some companies are pushing U.S. buyers to purchase more hardwood products to make up for the losses.

Copyright? Willwood Forest Products Co., Ltd. www.bsscxm.com

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