Trump Trade 2.0

Please click here to read an important update made on December 18th, 2024

The 2024 Election is over. The voters have spoken. President-Elect Trump will return to the White House on January 20, 2025, with significant Republican support in the U.S. House and Senate. While the pivot in leadership will have a significant impact on hundreds, if not thousands, of issues, the one question many in the Hardwood Industry are focused on is how the return of President Trump will impact trade and our ability to export our goods, particularly to China. The memory of the retaliatory tariffs imposed by China on U.S. lumber is still fresh for many in the industry, and concern is high about how a new round will impact our increasingly fragile businesses.

If the Administration holds on to the promises made on the campaign trail, tariffs will be back in a big way. Trump routinely stated he would impose tariffs of at least 60% on Chinese goods and 10-20% tariffs on those from the rest of the world. But he has also been adamant that he wants to sell more U.S. products around the world.

How the two desired outcomes become a reality is unclear. And if there’s anything we learned during his first presidency, it’s that this is a man who is unpredictable. Exactly how and how much tariff pain he will inflict on the rest of the world is unknown. The rest of the world is also much better prepared for how the Trump Administration functions and many international companies have adjusted their supply chains, which may hold up better than they did four years ago. China’s economy is also in a much different place economically than it was during the first Administration, and they have already begun to take steps in anticipation of new tariffs. To what degree any of this will make a difference is, again, a great unknown. 

Will the full 60% rate on China hit all imports or apply only to smaller sets of goods? Will tariffs be used more as a negotiating tool, as he did during his first term? Or will Trump turn to Congress to write legislation that allows duties to become a more permanent fixture? Although some in the anticipated Trump Administration are strong proponents of imposing tariffs, particularly Robert Lighthizer, former (and possibly future) U.S. Trade Representative, others are less enamored. Who will have the last word? 

How the incoming Administration rolls out new tariffs is also a question. Options include: 
Executive Action: In 1977, President Jimmy Carter signed into law the International Emergency Economic Powers Act, which could allow Trump to enact large parts of his trade agenda on his first day in office if an “unusual and extraordinary threat” to national security, foreign policy or the U.S. economy” is identified. During his first term in office, he used this power to pressure Mexico to help slow the flow of illegal migrants to the U.S. Tariffs were never imposed. 

Trade Investigations: Trump could also return to the 232, 301, and 201 provisions in trade laws that he used to impose duties on imports from China, as well as on steel and aluminum from trade partners from the European Union, Mexico, and Canada. This is the tool used in the first Administration on Chinese goods. It is important to note that many of these tariffs remained in place during the Biden Administration. Tariffs imposed under the 232 and 301 provisions require public comments and timelines, which could delay the imposition of new duties, although they attempt to link new tariffs to the U.S. Commerce Department and U.S. Trade Representative investigations from the first term, which could speed up the process. 

Revoke Special Status: Congress could pass legislation that repeals China’s Permanent Normal Trade Relations (PNTR) with the U.S., which they did to Russia after President Vladimir Putin’s invasion of Ukraine in 2022. This move would reset tariffs on Chinese goods to the higher levels of the past. 

Withdrawal from Trade Agreements: Withdrawing or threatening to withdraw from existing international trade agreements could be used to renegotiate those deals, much as what happened with the North American Free Trade Agreement (now the U.S.-Mexico-Canada Agreement). This act would require Congressional consent. 

How aggressively the incoming Trump administration will pursue implementation of the campaign trail tariff threats may be an open question, but how the Hardwood Federation takes proactive action is not. The team in Washington is already putting together a strategy to educate new Congressional members and remind returning members about the catastrophic impacts the first trade dispute had on the in-dustry. The American Hardwood Export Council has significant and impactful data to illustrate our concern. We will also be working with our Board and other industry leaders to propose steps the U.S. gov-ernment can take to insulate the industry should tariffs be imposed.

In the coming months, we will be reaching out to the industry for help with our efforts, particularly with members of Congress and administration appointees in key leadership positions. Stay tuned and get ready! Your political engagement will be essential in 2025!

By DANA COLE, Executive Director of the Hardwood Federation