International Trade
President Trump’s application of tariffs of 25% on imports from Canada and Mexico is impacting on the North American timber trade. Currently Canada accounts for about 80% of timber imports to the United States or about 25 to 30% of US timber consumption. Canadian timber into the US is subject to a tariff of 14.4% countervailing and anti-dumping duties. The addition of a 25% tariff would raise the duty paid to 39.4%.
There are two possible outcomes for Canadian timber exporters; to accept the tariff and continue to supply the market or to withdraw from the trade.
The ability of Canadian exporters to meet the market in terms of prices with the additional 25% duty is unknown. Some Canadian timber exporters have stated that they would withdraw from the US market if the additional duty was imposed which then raises the question about where the timber would be diverted to. The likely markets are in Asia in which case New Zealand’s timber exports to the region could be impacted. Bear in mind that Canadian timber doesn’t really bump against New Zealand timber in international markets so the impact may be minimal. Additionally, there doesn’t seem to be a demand and price co-relation between Canadian structural timber and New Zealand industrial and remanufacturing timbers, but who knows at this stage.
US timber producers have supported the imposition of the duties saying that they have the ability to supply all the timber demand in that country.
There is a possibility that timber imports from EU countries could also be subjected to a tariff. EU timbers to the US have grown in recent years and now account for around 12% of the import volume. As with Canadian timber, if EU volumes to the US fall then New Zealand timber exports could be impacted in third markets.
Interestingly an additional tariff of a lower figure of 10% has been imposed on imports into the US from China. Whether this will affect Chinese exports of wood based products utilising New Zealand timber to the US remains to be seen.
At this stage there is no indication that the US will impose additional tariffs on timber imports from New Zealand.
In the latest development a 30 day pause in the implementation of the raised tariffs on Canadian and Mexican goods has been announced while some new border measures are negotiated. What happens after the 30 days will depend on whether acceptable arrangements are reached. The 10% additional tariff on Chinese goods remains.
