Timber Security Executive Order: What’s in it, and Responses by Various Industries

To be sure, not all imports are softwood lumber, there is hardwood lumber, logs and a variety of other wood products that are imported and exported.

Here’s the EO:

By the authority vested in me as President by the Constitution and the laws of the United States of America, including section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862) (Trade Expansion Act), it is hereby ordered:

Section 1.  Policy.  The wood products industry, composed of timber, lumber, and their derivative products (such as paper products, furniture, and cabinetry) is a critical manufacturing industry essential to the national security, economic strength, and industrial resilience of the United States.  This industry plays a vital role in key downstream civilian industries, including construction.

The United States faces significant vulnerabilities in the wood supply chain from imported timber, lumber, and their derivative products being dumped onto the United States market.

“Dumping”- that reminds me of the perennial Softwood Lumber Dispute.. and  terms like “countervailing duties” and so on.

The United States has ample timber resources.  The current United States softwood lumber industry has the practical production capacity to supply 95 percent of the United States’ 2024 softwood consumption.  Yet, since 2016 the United States has been a net importer of lumber.

Wood products are a key input used by both the civilian construction industry and the military.  Each year, the United States military spends over 10 billion dollars on construction.  The military also invests in innovative building material technology, including processes to create innovative wood products such as cross-laminated timber.  The procurement of these building materials depends on a strong domestic lumber industry and a manufacturing base capable of meeting both military-specific and wider civilian needs.

It is the policy of the United States to ensure reliable, secure, and resilient domestic supply chains of timber, lumber, and their derivative products.  Unfair subsidies and foreign government support for foreign timber, lumber, and their derivative products necessitate action under section 232 of the Trade Expansion Act to determine whether imports of these products threaten to impair national security.

I’m not a fan of the “threats to national security” framing; we’ve had great relationships and made money from Canadian lumber duties, kept forest economists employed on both sides of the border, as well as folks at the WTO, for some years now. Plus there was the joint US-Canada funding (from the 2006 agreement) that went to our friends at the US Endowment for Forest and Communities, who are still doing useful things with the funding.

In fact, Pete Madden, their CEO posted an opinion piece about problems with the South Carolina timber industry and possible solutions.

Forest industry in parts of Canada were already struggling

Christopher Gaston, a forestry and economics associate professor at the University of British Columbia, said high tariffs were already challenging big forestry players to operate in the province.

Large forestry companies like Canfor make their money selling large amounts of lumber to U.S. buyers for a slim profit margin, according to Gaston.

He said raising tariff pressure will likely encourage them to move their business out of B.C.

“I can’t imagine any British Columbia company will be able to ship lumber for any kind of a profit; it would be at a loss,” he said. “The big mills will close down.”

Still, Gaston said there may be a silver lining. B.C.’s forest industry is already shifting into the hands of smaller and Indigenous-owned companies, which are better equipped to manage the province’s volatile forest supply.

Tariffs will up the pressure on smaller companies to create wood products from their harvest, instead of solely shipping raw lumber, Gaston said. That would mean building lumber processing infrastructure and facilities in Canada to add value to raw lumber.

“There’s a lot of pain associated with that,” he said. “We can’t just go from being a commodity producer to being more value-added oriented overnight, but ultimately, I think it’s the right thing for Canada to do in the long run.”

In the comments on the article, someone pointed to the San Group, which has its TM “from harvest to home.”

San Group developing 100% Canadian-made value added, low carbon based, environmentally friendly, renewable wood products – from Harvest to Home™

Sounds like the BC folks have a great deal in common with our own communities’ needs. Perhaps we should work with Canada to help both our industries having difficulties?

If I were really worried about threats to national security from imports of lumber, I’d also look at packaging and dangerous invasive diseases and insects. That issue seems to have been more or less ignored with greater concern about climate change.

Sec. 2.  Investigation.  (a)  The Secretary of Commerce shall initiate an investigation under section 232 of the Trade Expansion Act to determine the effects on the national security of imports of timber, lumber, and their derivative products.

(b)  In conducting the investigation described in subsection (a) of this section, the Secretary of Commerce shall assess the factors set forth in 19 U.S.C. 1862(d), labeled “Domestic production for national defense; impact of foreign competition on economic welfare of domestic industries,” as well as other relevant factors, including:

(i)    the current and projected demand for timber and lumber in the United States;

(ii)   the extent to which domestic production of timber and lumber can meet domestic demand;

(iii)  the role of foreign supply chains, particularly of major exporters, in meeting United States timber and lumber demand;

(iv)   the impact of foreign government subsidies and predatory trade practices on United States timber, lumber, and derivative product industry competitiveness;

(v)    the feasibility of increasing domestic timber and lumber capacity to reduce imports; and

(vi)   the impact of current trade policies on domestic timber, lumber, and derivative product production, and whether additional measures, including tariffs or quotas, are necessary to protect national security.

Sec. 3.  Required Actions.  (a)  The Secretary of Commerce shall consult with the Secretary of Defense and the heads of other relevant executive departments and agencies as determined by the Secretary of Commerce to evaluate the national security risks associated with imports of timber, lumber, and their derivative products.

(b)  No later than 270 days after the date of this order, the Secretary of Commerce shall submit a report to the President that includes:

(i)    findings on whether imports of timber, lumber, and their derivative products threaten national security;

(ii)   recommendations on actions to mitigate such threats, including potential tariffs, export controls, or incentives to increase domestic production; and

(iii)  policy recommendations for strengthening the United States timber and lumber supply chain through strategic investments and permitting reforms.

This sounds like a great program for work for forest economists. Except that they don’t work for DOC nor the military, so hopefully they will be still employed (and not the victims of cuts) when the DOC starts asking for their help.

I’m not sure that Canadian imports “threaten national security.”  Perhaps the military needs wood to function, at least to build buildings.  But they also need clothing, and are imports of clothing a national security issue? And how many new buildings does the military need? It seems like a stretch, but maybe the evaluation will agree with me.  At the same time, folks need housing and we build it with wood, so increasing wood prices runs against the needs of people for housing.

However, I think it would be a terrific addition to transparency if  the policy recommendations were vetted by the public and other experts.  Certainly there are many folks with experience of past permitting reform efforts that might be valuable; also younger people now working in the field.

Sec. 4.  Definitions.  As used in this order:

(a)  The term “timber” refers to wood that has not been processed.

(b)  The term “lumber” refers to wood that has been processed, including wood that has been milled and cut into boards or planks.

Sec. 5.  General Provisions.  (a)  Nothing in this order shall be construed to impair or otherwise affect:

(i)   the authority granted by law to an executive department or agency, or the head thereof; or

(ii)  the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b)  This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c)  This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

So what did the timber industry think of this EO? From AFRC (note that they are responding to both timber EOs in this piece:

The U.S. is the largest consumer of wood products in the world.  Collectively, Americans use 10-15 billion cubic feet (more than 100 million tons) of wood each year in the form of wood and paper products as well as wood energy.  This translates to roughly 640 pounds of wood per person per year, or 1.75 pounds of wood per person per day.  U.S. Forest Service lands grow 25 billion cubic feet of wood per year.  Yet, the U.S. is also the largest importer of wood products in the world to help meet up to one-third of its needs.  Imports are coming from dozens of countries, include Canada, China, Brazil, Mexico, Germany, Vietnam – and even Russia.

If you’re curious about Russia, note the degree that imports declined -apparently due to its invasion of the Ukraine in 2022. At least, according to FAS. The link AFRC has is to 2022 data on wood products more generally, so it would take a forest economist to figure out how to make them comparable.

Anyway, the paper industry, as represented by AF&PA, is not on board with tariffs (not the EO per se) according to this statement:

“While we recognize the Administration’s goals of securing our borders, AF&PA remains concerned that today’s new North American tariffs have potential to seriously disrupt our industry’s complex, cross-border supply chains. These manufacturing processes have been built and refined with the customer in mind around existing mill infrastructure for decades.