Tariff Increases And Wood Consumption Decreases
Reciprocal Tariffs Target Imports
Global – At the time of this writing, the reciprocal tariff policy recently announced by the United States aims to target many major sources of American furniture imports. This is anticipated to have a significant impact on the global furniture supply chain.
According to the most recent data available at press time, Vietnam accounts for 37 percent of the total furniture imports by the United States. A tariff of 46 percent has also been placed on Vietnam. After the U.S. implemented anti-dumping duties on bedroom furniture from China as early as 2004, Vietnam started to display a stronger presence in the global furniture supply chain.
In light of the 2019 trade conflict between the U.S. and China, several furniture manufacturers transferred their production lines from China to Vietnam. This permitted Vietnam to rise from second place to the top provider of U.S. furniture, but this could be altered due to tariff policies.
Considering the policy’s aim of guiding manufacturing back to the U.S., experts in the industry have pointed out that shortages in labor are one of the predominant challenges. This could become a larger problem, as many industries affected by tariffs are attempting to localize their production.
All furniture imports into the U.S. are anticipated to be affected by the extensive tariff adjustments, which may cause the global furniture purchasing pattern to experience fundamental alterations.
China has a tariff rate of 34 percent, which, combined with the existing tariff rate of 20 percent, equals a total of 54 percent on Chinese furniture. Sixty percent of the total furniture imports to the U.S. are from Vietnam and China, according to the most recent data available at press time. Cambodia, which is considered an emerging supplier to the U.S., is facing a 49 percent tariff rate.
Italy, Mexico, Canada, Malaysia, Thailand and Indonesia have all been subject to double-digit tariff rates as well, despite their status as major furniture suppliers to the U.S. markets. 20 percent tariff rates were placed upon suppliers such as Poland, Italy, Turkey and Portugal. These countries have higher manufacturing costs than many others and they may find it difficult to gain any true advantage from these recent tariff adjustments.
European Commission Deforestation Regulation Updates FAQs
Europe – Updated FAQs and guidance to simplify the execution of the European Commission (EU) Deforestation Regulation have been released. Slashing administrative burdens on businesses by 30 percent, in addition to streamlining procedures such as due diligence statement submissions, is the goal. Permitting annual submissions, enabling authorized representatives to manage submissions on behalf of businesses or groups of businesses and reusing existing statements for reimported goods are all important alterations.
These changes still, however, favor countries within the EU, in addition to lacking addressing the significant concerns of those involved in the forest industry and including geolocation requirements plus details that apply to countries that are ranked as “low risk.”
Tariff Talks Target Wood Trade
Global – Uncertain and rapidly changing trade policies continue in the United States and Canada according to the most recent information available at press time. A surtax remission for decorative hardwoods imported from North America was recently issued by Canada.
Trade representatives from Japan and Taiwan, in addition to other nations, have visited the United States to talk about tariff deals. Others, such as Vietnam, have had conversations over the phone. The Decorative Hardwood Association (DHA) is monitoring the results of these trade discussions and the impacts on the industry.
The Missouri General Assembly has introduced legislation to counter the misleading marketing that has been labeled as “wood” for products that resemble wood, such as laminate and vinyl, which is an example of the Missouri General Assembly picking up on the DHA’s efforts.
Production Cost Reductions And U.S. Replacements
Vietnam – Many wood industry enterprises associated with the Handicraft and Wood Industry Association of Ho Chi Minh City, have transitioned to different markets such as Japan, Australia, Europe and Canada to minimize their dependence upon the U.S. marketplace. There are also certain enterprises that are searching for new partners and customers to replace U.S. buyers.
By supplementing labor efficiency, businesses are trying to reduce production costs. In addition, they are also sourcing more cost-effective raw materials to decrease the overall price of products. To increase added value and differentiation, multiple businesses are placing a bigger emphasis upon design enhancement and the quality of their products.
However, not every enterprise has implemented such specific strategies, remaining unprepared due to their dependence on U.S. markets. They are relying on official updates from government authorities or customer feedback.
Enterprises have expressed their desires for the Vietnamese government to increase negotiations with the U.S. to mitigate duties. In addition, enterprises hope the government will consider and promote policies that balance the trade relationship between the U.S. and Vietnam. Important actions that could assist them in surviving this trying period would be reducing export tariffs on wood products and increasing financial aid for exporters.
Providing companies with more time to adjust to the new business atmosphere would require a reasonable and gradual tariff reduction guide that is in conjunction with the decrease of export and import tariffs on American wood products.
Finland Experiences Wood Product Industry Increases
Finland– According to the Natural Resources Institute, forest industries in Finland have raised their total wood consumption by two percent and by doing so, they have reached 63 million m3 of roundwood. A growth in domestic and imported wood usage is reflected by this increase.
Including logs and pulpwood, domestic roundwood consumption added up to 59 million m3 . The intake of imported products such as roundwood, chips and sawdust has reached four million m3 by rising 15 percent. At the time of this writing, these imported products now add up to six percent of the total wood used by forest industries in Finland.
The consumption of logs, which is an important portion of the roundwood total, increased by eight percent to 26 million m3. Despite this, the consumption of pulpwood experienced a decrease of two percent, totaling 36 million m3. Pine ranked the highest overall regarding the processed wood category at 46 percent, followed by Spruce at 38 percent and hardwood at 16 percent.
Compared to the previous year, the wood products industry experienced a demand increase of seven percent, using 28 million m3 of roundwood. Sawmills alone accounted for 26 million m3 of the total. Despite this increase, pulpwood decreased by one percent, using 35 million m3 of roundwood. Even though there was a decline in roundwood usage in the pulpwood industry, the consumption of domestic wood chips and sawdust by the pulpwood industry grew to eight million m3, displaying a shift in the sourcing of raw material. The main processor of the pulpwood was the chemical pulp sector.
The roundwood consumption, based on region, was led by South Karelia, which accounted for 13 million m3. Central Finland was second with six million m3 and Satakunta was third at five million m3. Forest industry byproducts, such as sawdust and wood chips, contributed with nine million m3 , marking a two percent growth in usage toward the manufacturing sector.
Reductions And Revisions Voiced By Many In Germany
Germany– The German Sawmill and Timber Industry Association (DeSH) viewed a document of a delegated act that was recently printed by the EU Commission, in addition to new guidelines for the implementation of the EUDR, to be on the right track. Significant concerns voiced by practitioners are steadily arriving in Brussels, which is an effect of the planned reduction of excessive bureaucracy. Despite global political developments, the DeSH keeps seeing a need for revision of the EUDR in not only terms of timing but also content. The managing director of DeSH Julia Möbus shared that issues, such as the ones imposed by the EUDR, during times of trade difficulties should be avoided.
The aim of the simplifications is to decrease the administrative burden for businesses as much as possible by introducing yearly due diligence statements, as opposed to detailed evidence of product batches or by strengthening the position of authorized representatives for small and midsized suppliers.
Möbus noted that the EUDR requirements should not disregard the reality of businesses. Decreasing administrative troubles will become a necessary precondition for acceptance and implementation in practice. The target remains to steadily decrease the requirements in low-risk countries.
