The flow of lumber, logs and pulp from the US to China has fallen sharply since the US government initiated tariffs on Chinese imports to the US in May of 2018. In the first four months of 2019, China’s imports of US forest products were down 43% from the same period in 2018.

The trade war between the US and China has not only resulted in higher costs for US consumers on homeappliances, electronics, apparel, footwear,and industrial machinery, but has also impacted US exporters offorest products to China. China’s economy slowed during 2018 and early 2019,causing the total value ofimported wood pulp, lumber and logs to decline by just over 10% from the first four months of 2018 to the same period in 2019, reports the WRQ. Simultaneously, forest productimports from the US fell byalmost 42% in value.

From January to April,2019, China imported logs, softwood lumber,and pulp from the US collectively valued at 600 milliondollars. This isdown from$1.03 billion dollars’ worthof forest products imported during the same period in 2018. The biggest declinesin import value of US forest products from the 1Q/18 to the 1Q/19 have been those of wood pulp and hardwood logs, falling $220 million and $110 million, respectively.

With forest product imports from the US deterioratingand American wood product exporters losing market shares in the Chinese market, imports from other countries, including Canada and Russia, have fallen less or even expanded the past year. While theUS market share for forest products imports hasfallen by 35% from the first four monthsof 2018 to the same period in 2019, Canada’s and Russia’s shareshave gone up by 12% and 4%, respectively.

Supply of softwood logs and lumber from Canada,in particular,hasincreased in 2019, with import volumes of logs increasing25% year-over-year, and lumber imports increasing 54% in early 2019 as compared toearly 2018.In addition, there hasalso been a rise in shipments of both logs and lumber from Europe since the trade conflict started in the summer of 2018.

Evenif the trade negotiations between the US and China result in lower or eliminated tariffs in the future, the new supply sources thatChineseforest products importers have developed during the on-going trade disputewill likely remain, permanently changing historic trade flows to China.

Source: WRQ