Trump Imposes New Tariffs on Wood Goods Amid Trade Conflict
Former US President Donald Trump introduced new duties on wood goods and timber as part of an escalation in his trade conflict. With the mission of strengthening American national security and promoting local manufacturing, the US announced it plans to levy a 10% tariff on softwood timber and lumber and a 25% tariff on upholstered wood furniture and kitchen cabinets, starting from October 14.
Expected to rise from the start of the following year, the tariff on furniture will escalate to 30%, while those on cabinets will increase to 50%. However, these rates can be renegotiated if countries engage and arrange a trade agreement mutually beneficial with the US.
The newly implemented tariffs won’t fully affect countries that have recently managed to secure trade agreements with the United States. The UK stands as one of these nations; its goods will not be subjected to these additional tariffs and will continue to attract a maximum duty rate of 10%. The tariffs placed on goods from the EU and Japan will have an upper limit of 15%.
The tariffs were imposed based on Section 232 – a law that entitles the US president to levy duties to mitigate a threat to national security. Trump’s administration has previously initiated several probes to set sectoral tariffs on imports, including, but not limited to, steel, aluminium, automobiles, and copper.
These wooden goods are imported in quantities and under circumstances that could potentially compromise US national security. The importance of wood products for national defense, economic stability, vital infrastructure, and the industrial resilience of the country cannot be overlooked. The dependence on imports has, however, diminished domestic manufacturing capabilities, potentially jeopardizing national security and economic stability.
Wood-based products play a crucial role in the operations of the Department of War. These resources are used in the creation of ammunition and serve an instrumental purpose in thermal-protection systems for nuclear re-entry vehicles.
Increasing tariffs would likely increase domestic capacity, spark job creation, reinforce industrial resilience, and stimulate investment in American industries. It would also reduce the country’s dependence on imports, thereby strengthening its domestic manufacturing industry and contributing significantly to national security and economic stability.
This announcement is expected to have profound implications for Canada’s forestry industry, valued at approximately $63 billion. This industry has already encountered problems due to steep anti-dumping duties from the US. As of the previous year, the US was the destination for nearly 90% of Canada’s softwood exports, with a significant amount going towards servicing the homebuilding sector.
This development could lead to cutbacks at Canadian sawmills if the market does not improve. In March, President Trump authorized an investigation into alleged unfair pricing tactics by Canada in the lumber industry, asserting that it posed a risk to national security.
Trump also directed efforts towards increasing domestic timber production to decrease dependency on imported goods. Given that the US remains the primary market for Canada’s surplus capacity, the tariffs would have a significant impact.
Such behaviour is significantly detrimental to America’s producers and workforce. The announced tariffs planned to be enacted more gradually compared to previous suggestions.
During the previous week, it had been suggested that abrupt tariff hikes were looming. It was suggested to impose 50% tariffs on kitchen and bathroom cabinets and 30% duties on upholstered furniture from a preset date.
However, the tariffs outlined in the new order will follow a more staggered implementation process. The decision signals a partial retreat from the aggressive stance Trump’s administration demonstrated during the previous week.
This more measured approach may allow impacted countries, industries, and businesses the vital breathing space needed to adapt to the changes and to negotiate potential trade deals with the US in order to alleviate the negative effects of these tariffs.