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Sino-US trade war affects China's wood industry
Since March 22, 2018, the White House official website issued a presidential memorandum on the 301 investigation, Trump announced that China and the United States have gradually escalated trade frictions since they imposed tariffs on more than 1,300 US imports of China's $50 billion.
On July 11, 2018, the US government issued measures to impose tariffs on imports of about 200 billion US dollars of goods imported from China, and solicited public opinions on the measures. On August 2, the US announced that it would increase the tariff rate imposed on the above-mentioned 200 billion US dollars of goods from 10% to 25%. On August 20-27, a six-day hearing was held on 200 billion US dollars of goods to listen to the opinions of the people. The $200 billion list released on July 11 contains logs, sawn timber, veneers, flooring, particleboard, fiberboard, plywood, packaging materials, wooden doors and windows, and wood furniture. The final list of tariffs and the date of implementation will be announced after the hearing.
In response, the State Council Customs Tariff Commission decided on August 3 to impose tariffs on 5,207 tax items imported from the United States. The measure involves an import trade volume of approximately US$60 billion from the United States, and the additional tax rate is divided into 5%, 10%, 20%, 25%, etc. (see the annex for a detailed list). The product list also includes logs, sawn timber, veneers, flooring, particleboard, fiberboard, plywood, packaging materials, wooden doors and windows, and wood furniture. Execution time will be announced later.
Whether China imposes tariffs and implementation time on timber and wood products originating in the United States depends on whether the US's $200 billion list covers wood and wood products. The situation is expected to be further clear from September to October.
At present, there are fewer timber and wood products in the tariff collection list, and timber importers and processing plants still maintain a wait-and-see attitude. After field research visits, the current market feedback is summarized as follows:
1. Little impact on Chinese timber supply
In the short term, due to the high domestic timber stocks in the first half of this year, the impact on supply in the second half of the year is not significant; July-August is the season for next year's orders. Due to uncertain future policies, Chinese importers will not place orders or Only 50% of orders in the past year, the US material supply will be affected next year.
In the long run, US timber accounts for only about 10% of China's total timber supply, and China's total timber supply is not affected. In the first half of 2018, US logs accounted for 10.7% of China's total log imports, and sawn timber accounted for 8.4% of imports, which can be solved by looking for alternative timber from other countries of origin or transshipment.
2. If tariffs are imposed, it will have a greater impact on the US timber industry.
China is the largest timber export destination in the United States. According to the US Bureau of Statistics, in 2017, the United States exported 6.138 million cubic meters of logs to mainland China, accounting for 53.9% of US log exports; 3.26 million cubic meters of sawn timber, accounting for 38% of US sawn timber exports. In the first half of 2018, the export of logs to China was 3.364 million cubic meters, an increase of 19.51% year-on-year; the sawn timber was 1.705 million cubic meters, an increase of 11.06%. Chinese log imports account for half of the US export market, and sawn timber accounts for one-third of the market.
In addition, the US timber harvesting industry and the wood processing industry have been lacking in labor, and the new energy industry is now developing rapidly, absorbing large sectors of labor. If China no longer imports timber, the US processing plant will dismiss the workers if there is no order, and even if the orders are returned in the following year, it will be difficult for the US wood processing industry to recruit workers.
Wood industry knowledge: planting technology