Trump Takes Aim at Timber and Lumber Imports in New Executive Order

The investigation will be conducted under Section 232 of the Trade Expansion Act of 1962, as amended. This provision has previously been used by the Trump Administration to impose additional duties on imports of steel and aluminum.

Section 1 of the EO which sets out the policy reason for the investigation reads as follows:

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.

… .

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.

The scope of the investigation, according to section 2 of the EO, covers imports into the United States of timber, lumber, and their derivative products from all countries.

The statute prescribes a process and timing standards for Commerce’s investigation. For example, given the national security rationale for the investigation, once the Section 232 investigation is requested, Commerce must begin the investigation immediately.  During the investigation, the US Secretary of Commerce must consult with certain officers and agency heads, including the US Secretary of Defense.  If appropriate, Commerce will hold public hearings or otherwise afford an opportunity to present information and advice relevant to the investigation.

The next step is for the Secretary of Commerce, in consultation with the Secretary of Defense, to initiate the investigation in order to determine the effects on the national security of lumber imports.  The relevant factors for the investigation will include national defense, impact of foreign competition on the economic welfare of domestic industries, and other factors outlined in section 2(b) of the EO which include:

1. The current and projected demand for timber and lumber in the United States.
2. The extent to which domestic production of timber and lumber can meet domestic demand.
3. The role of foreign supply chains, particularly of major exporters, in meeting US timber and lumber demand.
4. The impact of foreign government subsidies and predatory trade practices on US timber, lumber, and derivative product industry competitiveness.
5. The feasibility of increasing domestic timber and lumber capacity to reduce imports.
6. 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.

The report from Commerce is to be delivered to the president within 270 days of initiation of the investigation and will focus on whether imports of lumber are in such quantities or under such circumstances as to threaten to impair the national security, though it may be delivered sooner. Additionally, the report may also include Commerce’s policy recommendations for strengthening the US timber and lumber supply chain through strategic investments and permitting reforms. The president can concur or not with the Commerce Secretary’s recommendations and take action to adjust the imports (such as tariffs, quotas, or a combination of the two measures) or other non-trade related actions as deemed necessary.

Interested parties can generally participate in Section 232 investigations by filing comments and information on the record and presenting their views at a public hearing. In previous investigations, the Commerce has issued questionnaires to US producers, importers, and end users of the article under investigation.  Details on the opportunity for public input into this process are likely to become available when Commerce announces the initiation of the investigation.

In the past, where Section 232 duties have been implemented, the rate of duty has been in addition to any other duties, fees, exactions, and charges applicable, including antidumping and countervailing duties.