Just how much will the price of lumber go under Trump’s tariff plan? That is the question posed by the Peterson Institute of International Economics, which revealed that the president-elect’s plans to tariff Chinese, Canadian and Mexican goods “on day 1” will add billions to the price of timber products.
According to a new analysis prepared by the institute, tariffs of up to 60% on Chinese imports, 25% on USMCA partners like Canada and Mexico, and 10% on all other nations will have significant implications for the $50 billion trade in imported wood products: “That’s because there is no such thing as a free trade tax,” according to a report prepared by Julieta Contreras, Mary Lovely and Jing Yan, who warned that low-income Americans would be hit hardest by the tariffs, which will add at least $25 billion to the cost of timber imports alone.
“A tariff of 60% on China would be a major shock to international goods markets,” the economists said, adding that after the 2018–19 China-US trade war, “62% of US imports from China are subject to an average tariff rate of 16%, far below the rate promised by Trump on the campaign trail.”
The report also revealed that wood products, which are subject to near-zero tariff rates across the vast majority of countries where the US has free trade agreements, will be amongst the industries most exposed to the tariffs: The tariff on Chinese furniture and plywood will jump from 16.2% to 60%, while tariffs on more than US $3 billion worth of Canadian softwood lumber jumping from 14.54% to 25%.
On Monday, Wood Central revealed that China – which trades more than US $10 billion in forest products with the United States – was looking to “Trump proof” its economy ahead of a potential trade war. Announced last week as part of the Central Economic Work Conference, CCP officials have pledged to stabilise the stock and real-estate markets—which have seen lumber and log imports drop over the past 12 months—while also preparing for “external shocks,” including potential trade wars with the incoming Trump administration and Russia.
- To learn more about Donald Trump’s plans to use tariffs (and thus lift timber prices), click here for Wood Central’s special feature from earlier this month.
