“It’s about time”– that’s what many thought as the White House recently announced a 90-day temporary reduction in tariffs with China.
It came at just the right time for the U.S. hardwood sector as shipments of hardwood lumber and logs came to a standstill. While the escalation in trade tensions and higher tariffs hurt U.S. pallet producers, it could have been devastating to the hardwood lumber sector.
The American hardwood sector has been struggling for a while. But things were starting to get better earlier in the year according to Tom Inman, president of the Appalachian Hardwood Manufacturers, Inc. (AHMI). He commented, “The Appalachian hardwood industry was off to a fair start in 2025 and then the “T” word returned. Most AHMI producers were reporting improved sales each month of the first quarter.”
China remains a big market for American hardwood lumber and logs. Michael Snow, the executive director of the American Hardwood Export Council (AHEC) admitted, “The problem is we still have too many eggs in the China basket.”
Many U.S. producers rely on export markets, especially China. Snow noted, “That’s why the export markets are so important. It’s not just the volume, but it is half of the high-end green lumber production.”
China used to be an even bigger part of the U.S. market back before the last trade war in 2018. Another major factor has been regulatory reforms enacted about ten years ago in China that required apartments to be turnkey instead of allowing builders to construct shell units that were left unfurnished. This led many Chinese builders to opt for to cheaper, inferior products to U.S. hardwoods unless they knew they could sell those higher end finishings.
Since the first trade war with China in the first Trump administration, the American producer’s share of this smaller Chinese market continues to decline. Snow said, “We used to be 40% of a much bigger market, now we are 27% of a smaller one.”
Dana Lee Cole, the executive director of the Hardwood Federation, recently stated, “The U.S. hardwood industry was severely and negatively impacted by retaliatory tariffs on our products during the 2018-2020 trade dispute with China, losing approximately half our sales; markets which we have yet to recover. Domestic prices also took a tumble due to lack of export markets, creating additional pain and long-term damage to the industry.”
As a result, the Hardwood Federation was preparing to ask for a $450 million fund be identified and reserved for distribution to impacted members of the U.S. hardwood industry if a trade resolution is not reached. And while everyone is happy about the temporary reprieve, there is no guarantee that a long-term deal will be reached. Both sides could slap high tariffs back on in August if an impasse arises.
But for now, it looks like hardwood lumber can ship lumber to China even though the ban on logs remains. The U.S. will reduce tariffs on Chinese goods to 30% down from 145%; China will drop their tariffs to 10% down from 125%. The difference is due to continued U.S. imposition of 20% tariffs related to the import of fentanyl into the country from China. Both countries indicated that they are going to collaborate on the fentanyl crisis and take real action.
The National Wooden Pallet & Container Association (NWPCA) said that it is closely monitoring the Trump Administration’s tariffs and trade deal negotiations. A member survey on the 232 lumber tariffs indicated that “the overwhelming majority of those expressed concerns about the impact of these potential tariffs on their business, regardless of whether or not the company imported lumber.”
Snow commented, “It is important to note that the log ban is not ‘officially’ related to the trade war, and China insists it is a phyto issue, so logs are still not permitted at all. China also appears to be unwilling to even discuss solutions to the phyto issues for logs.” But AHEC has learned that U.S. trade negotiators are aware of the log ban and are working with the Chinese towards a solution.
Even with the trade barriers coming down, will China have an appetite for U.S. hardwoods? It appears that based on comments from U.S. exporters on the ground in China, “There is definitely a latent demand there if we can get some kind of stability.”
What does the tariff reduction mean for trade coming from China? The South China Morning Post recently ran a story with the headline, “Shipping demand set to explode as firms rush to exploit US-China tariff pause…The surge in container traffic could be so large that it creates bottlenecks and delays at American ports, analysts warn.” If a surge occurs, it could lead to a boom in pallet demand for the summer months. Given all the uncertainty, it could be an interesting summer for international trade if the experts are right.
