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If the Sino-US Trade War Continued, It Would Greatly Impact China's Wood Product Export

China Agriculture Report By CnAgri2018-09-12 15:43:15China Agriculture Report Print
The Sino-US trade war started to involve timber and its products. Whether China would impose tariffs on timber and wood products originated in the United States and when they are implemented depends on whether the US’s $200 billion list would cover timber and wood products. The situation is expected to become clearer from September to October.
Our analysis shows that if the Sino-US trade war continued, the main impact on the wood and wood products industry would mainly be:
A. It would have little impact on China's timber supply
In the short term, due to the high domestic American timber inventory of the first half of this year, the impact on the supply of the second half of this year is little; July and August are supposed to be the season for placing the next year's orders. However, due to the uncertain future policies, this year, Chinese importers do not order or only order 50% of the orders of the previous years. Next year's U.S. timber supply would be affected.
In the long run, as American timber accounts for only about 10% of China's total timber supply, China's total timber supply is not affected much. In the first half of 2018, U.S. logs accounted for 10.7% of China's total imports of logs and sawn wood accounted for 8.4% of China's imports. This could be solved by looking for alternative wood from other countries of origin or by transshipment.
B. If tariffs were imposed, it would have a great impact on the US timber industry
China is the United States’ largest timber export destination. According to the data of the US Statistics Bureau, In 2017, the United States exported 6.138 million cubic meters of logs to China, accounting for 53.9% of the U.S.’s log exports, 3.265 million cubic meters of sawn timber, accounting for 38% of the U.S.’s sawn timber exports. In the first half of 2018, the US exported 3.364 million cubic meters of logs to the mainland China, up 19.51% year on year; 1.705 million cubic meters of sawn timber, up 11.06% year on year. China's log imports account for half of the US’s export market and sawn timber occupies 1/3 of the market.
C. Great impact on China's exports of wood products
For the wood products with high added value, such as flooring and furniture, the proportion of raw materials in the cost is relatively small. If the tariff is controlled within 10%, the impact of the tariff imposed on each other will be limited under the effect of the exchange rate. If the imposed tariff is 25%, the cost of the wood products will be shared by the manufacturers and American suppliers. Factory prices will increase.
In the third round of mutual tariffs, if the United States imposes 25% tariff on China’s export of wood products such as flooring, plywood, furniture and wooden doors, China's export market share will be seriously affected.
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