White House targets timber and furniture imports with new section 232 tariffs, effective October 14

Following a series of social media posts issued on September 25, in which President Trump announced new tariffs on various items, including heavy trucks, kitchen cabinets, and pharmaceuticals, which will go into effect on October 1, a White House executive order issued yesterday announced new tariffs on imports of timber, lumber, and their derivative products (wood products), focused on an effort, to bolster American industry and protect national security.”

In the executive order, President Trump explained that Secretary of Commerce Howard Lutnick found that following an investigation into these products under Section 232 of the Trade Expansion Act of 1962 that wood products are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the U.S. and provided recommendations under section 232 to adjust the imports of wood products so that imports will not threaten to impair the national security of the U.S.

“The Secretary found that present quantities and circumstances of wood product imports are weakening our economy, resulting in the persistent threats of closures of wood mills and disruptions of wood product supply chains, among other things, and diminishing the utilization of production capacity of our domestic wood industry,” said President Trump. “Because of the state of the United States wood industry, the United States may be unable to meet demands for wood products that are crucial to the national defense and critical infrastructure.”

The new tariffs, which are set to go into effect on October 14, include the following:

• a 10% tariff on global imports of softwood lumber;
• a 25% global tariff on certain upholstered furniture, which will increase to 30% on January 1;
• a 25% global tariff on kitchen cabinets and vanities, which will increase to 50% on January 1;
• trading partners who negotiate with the United States to address the threat of wood imports to the national security of the United States may be able to secure an alternative to the pending tariff increases;
• the United Kingdom, the European Union, and Japan will enjoy more favorable treatment that reflects the terms of their trade deals with the United States;
• the Section 232 tariff on subject wood imports from the United Kingdom will not exceed 10%;
• the combined Section 232 tariff and most-favored nation tariff on subject wood imports from the European Union and Japan will not exceed 15%;
• products that are not subject to these Section 232 tariffs will generally be subject instead to reciprocal tariffs; and
• the treatment of products on the list of Potential Tariff Adjustments for Aligned Partners (PTAAP) remains unchanged unless an antidumping or countervailing duty order applies

Chris Rogers, Head of Supply Chain Research for S&P Global Market Intelligence, told LM that tariffs on wood imports related to furniture are a big deal as these imports are mostly moved over the water

And Paul Bingham, Director, Transportation Consulting, at S&P Global Market Intelligence, noted that these tariffs seem more targeted to protect U.S. manufacturers from import price competition, although the objective stated is to promote onshoring of manufacturing of those furniture categories. 

“It will be expected that some importers will adjust and pay the new tariffs, negotiating with foreign suppliers on the prices plus considering how much to also either lower margins on their U.S. import sales or pass the costs on to the U.S. customers with higher prices,” he said. “For these products and at these tariff rates, the U.S. government tariff revenues are likely to increase instead of pricing out U.S. imports of these commodities to be replaced by U.S.-made products.”