Lumber is a bummer in the United States right now. The forestry sector—landowners, logging companies, and sawmills—have lost an estimated $1.1 billion in 2020. Why? Wildfires played a part. So did Hurricane Laura. But the biggest culprit is COVID-19.
Normally, lumber and logs and other forest exports comprise the third-leading U.S. agricultural exports after soybeans and corn. But when workers are required to stay home, saws remain silent, no trees are felled, and logs aren’t hewn into lumber.
To make matters worse, an old trade war with China severely curbs the sale of U.S. forestry products to foreign markets. The forest products relationship between China and the United States is complex. America sells logs and lumber to China. China uses the logs and lumber to produce finished wood products such as furniture and hardwood flooring. China exports these finished wood products to the world—selling many of them right back to people in the United States.
This raises an obvious question. Why don’t Americans simply make their own furniture and flooring? The answer is wages. Chinese companies can pay Chinese workers less money than U.S. companies can pay U.S. workers. This makes it more profitable to sell logs and lumber to China and then buy back finished wood products.
What happens in China does not stay in China. When the coronavirus surfaced there, Chinese businesses closed. Furniture making and flooring production came to a standstill. For a time, these businesses didn’t need logs and lumber from the United States.
Yet another factor interrupted demand: the reduced incomes of consumers. Many people have put off buying furniture during the pandemic. U.S. furniture sales decreased as much as 66% in April 2020 when stay-at-home orders went into effect. As of August, U.S. imports of wood furniture and other wood products from China were down by nearly $2 billion, or 40%.
Forestry was in trouble even before COVID-19 because of the trade war between China and the United States. In 2018, President Trump ordered that tariffs (fees) be imposed on Chinese imports. That included a 10% tariff on furniture and related goods from China. In retaliation, the Chinese government imposed tariffs on many U.S. agricultural goods, including 25% tariffs on U.S. logs and lumber. This double tax nearly halved exports to China.
During the pandemic, workers in many industries look to God to care for their needs despite uncertainty. For now, sawmill owners and forestry workers barely hang on, waiting to see if their industry goes “Timber!”
We do not know what to do, but our eyes are on you. — 2 Chronicles 20:1
