Policy Alert: Increasing Domestic Supply of Timber and Lumber

Action: On March 1, the President signed an Executive Order initiating an investigation to determine the effects on national security of timber and lumber imports.

What it does: The Order orders the Secretary of Commerce to initiate an investigation under Section 232 of the Trade Expansion Act of 1962 to “determine the effects on the national security of imports of timber, lumber, and their derivative products.” It orders the Commerce Secretary to consult with the Defense Secretary and the heads of other relevant departments and agencies to evaluate national security risks and submit a report to the President within 270 days (November 26) that includes a risk assessment, recommendations to mitigate threats, and policy recommendations to strengthen the US timber and lumber supply chain through strategic investments and permitting reforms.

Key Insights

• Section 232 of the Trade Expansion Act of 1962 allows the President to impose import restrictions based on an investigation and affirmative determination by the Department of Commerce that certain imports threaten to impair U.S. national security. President Trump initiated eight Section 232 investigations during his first term, and ultimately imposed tariffs under two investigations on aluminum and steel imports.
• The Order follows a February 19 conference at which Trump announced that he would consider tariffs on international lumber and wood products, many of which are imported from Canada.
• Softwood lumber has long been an irritant in the US-Canada trade relationship. The Commerce Department had already decided to triple the rate of duty in response to its finding of Canadian dumping of softwood lumber on the US market, from 7.66% to 20.67%, in addition to countervailing duties of 6.74%, for a total duty near 27%.
• White House trade advisor Peter Navarro said the provisions of the Order would counteract the actions of big lumber exporters including Canada, Germany, and Brazil.
• In 2021 (the most recent year data is available from the US International Trade Commission), Canada provided the US with nearly half of its lumber imports, totaling $28 billion worth. That same year, the US exported nearly $10 billion of lumber to Canada and $6.5 billion to Mexico.
• According to a White House official, the goal of the Order is to streamline the permitting process by salvaging more wood from forests and expand how much wood product can be offered for sale. The official said it would also help prevent wildfires and improve animal habitats.