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From the Executive Director: Trump Trade 2.0, Strategy
As we noted last month, the incoming Trump Administration presents both opportunities and challenges for the Hardwood industry. Certainly, tax and regulatory reform efforts could prove beneficial to our companies’ bottom lines. More challenging will be how the industry responds to the Administration’s global trade policy. As many will recall, the 2018 retaliatory tariffs imposed by China in response to then President Trump’s tariffs on Chinese imports to the U.S. had devastating impacts on the hardwood industry. The immediate impact of these tariffs was over $1.045 billion in lost lumber sales to China during the trade war years. Even after tariffs were remove, it carried a lasting trade reduction valued at over $730 million every year. Although we cannot control the President Elect’s imposition of tariffs on our global trading partners, we can and will take action to influence the decision-making process and make recommendations to provide financial relief to the industry should retaliatory action be levied by key hardwood market countries. To prepare for a second round of global tariffs, the Hardwood Federation staff and Executive Committee have been working to develop a strategy for action, both for the Federation team and the industry at large. The Federation will undertake the following:
Communications
The Hardwood Federation will develop communication pieces that provide details of the immediate and long-term impacts of the 2018 retaliatory actions imposed by China. The Federation team is already working with AHEC to develop materials and has a working document and PowerPoint presentation. Outreach will be made to companies asking for specific, detailed information of the impacts on companies that can illustrate the very real damage the retaliatory tariffs did to companies, employees, and local communities.
The Federation will also share these materials broadly with key members of Congress and the Administration. The Federation Team has already held meetings with staff working with the incoming Chairs of the House and Senate Agriculture Committees. These are all people we know well and who are sympathetic to our industry needs. We are also working on scheduling meetings with committees of jurisdiction over Natural Resources and Trade.
Administration, Congressional Outreach
The Federation has sent a letter to the President-Elect’s transition team and Senator Vance’s Chief of Staff, who we understand to be collecting feedback and priorities. While we express support for the new Administration and our intention to work with them on moving forward with tax and regulatory measures that support small business, the letter focuses on trade policy and outlines the consequences of the previous trade war. As the Administration and Congressional leadership take shape, we will identify members of the industry who have personal or professional contacts with top level decision makers and engage their support and action. The Federation will work through the Boards and Association Executives to identify these individuals.
Advocate for Immediate Financial Relief
Through USDA programs, the federal government may provide resources to mitigate the adverse impacts of counter-tariffs. The Federation will develop a funding formula for financial relief that the Federation and industry can use to advocate in the event that retaliatory action is taken. The Executive Committee has identified potential members from a wide variety of companies in terms of size and region and is reaching out. We hope to have a formula developed in early 2025.
Industry Mobilization
The Federation will provide opportunities for the industry to directly contact their Members of Congress to share information about their companies, including employee numbers and economic contributions. They can also share facts regarding 2018 impacts and concerns about future impacts. The Federation will use its grassroots outreach tool to drive communications to Capitol Hill and organize a special “Fly-In” to D.C. as the situation demands. The annual Fly-In will be scheduled for the late spring, and trade will no doubt be at the top of our priorities list. To expand our network of allies and amplify similar messages, the Federation will Identify and engage other wood products industry sectors for mobilization. This includes the softwood sector, landowners, the logging community, and foresters.
This strategy will no doubt develop and expand over time. Although President-Elect Trump has expressed his intention to use tariffs to reach his economic goals, it is difficult to say exactly how, or when, these strategies will be imposed. The Federation strategy makes sure we are prepared for action how the situation evolves.
Federal Funding Deadline Approaches
The most important item on the congressional agenda during the post-election session is to pass a spending bill that will fund government operations beyond the deadline falling on Friday, December 20. On Tuesday, House leaders announced a budget deal to include a year-long extension of the farm bill, $2.4 billion for the National Forest System to address damages resulting from wildfires, hurricanes and other natural disasters, and $10 billion in financial assistance for farmers, a GOP priority. Another key item includes a year-long delay for reporting requirements under the Corporate Transparency Act, action consistent with a federal court decision to suspend the law’s requirements (See article below). The Federation will keep you posted on developments.
NDAA Moves Forward, Drops Anti-Forest Management Provisions
Today, the Senate overwhelmingly passed the National Defense Authorization Act (NDAA), following House passage on December 11, and pushed the legislation over the finish line. This year as part of the NDAA process, two amendments were filed to remove a large portion of the Hoosier National Forest in Indiana from any type of forest management activity. Outgoing Sen. Mike Braun (R-IN) has led the effort and filed the amendments that mirror language in S. 4402, the Benjamin Harrison National Recreation Area and Wilderness Establishment Act of 2024. Fortunately, these amendments were not included in a larger “manager’s amendment” and will not be considered by the full Senate. The Federation team has been working this process aggressively over the last few weeks to oppose any attempt to allow Sen. Braun’s legislation to ride on the NDAA. Likewise, we have been actively engaged in the Farm Bill reauthorization space as Sen. Braun successfully included these provisions in Senate Ag Committee Chairman Debbie Stabenow’s bill that was unveiled last month. It appears, however, that the Farm Bill path to passage is a dead end as Stabenow’s bill will not move this year. Also, the Senate Armed Services Committee Report included language directing the Department of Defense and the General Services Administration to move swiftly in transitioning from endangered apitong to domestically produced red oak for trailer bed and other applications. The Federation is confirming whether the favorable language will be included in the Conference Report that accompanies the final bill.
Another EU Hurdle Cleared Towards Delay of Deforestation Rule
On December 3, the European Union (EU) reached a provisional agreement to postpone implementation of the deforestation regulation until December 30, 2025. On December 17, the EU Parliament gave its final stamp of approval in a plenary vote. The final, official step will be publication in the EU journal before the end of the year. These developments follow in the wake of rejection of a “no risk” category intended to provide flexibility for countries that practice sustainable forestry, among other requirements. Although the extension is a welcome development, we will need to remain vigilant in terms of how the rule will evolve over the next year and how guidance for implementation is written. The American Hardwood Export Council has been leading the charge for the industry on this issue and will prepare an in-depth analysis on where we go from here. The Federation will continue to work closely with AHEC and will share any information they provide.
Federal Court Suspends Enforcement of Corporate Transparency Act
In a victory for small businesses, on December 3, a federal court issued a nationwide injunction that suspends the enforcement of disclosure requirements under the Corporate Transparency Act (CTA). The CTA took effect this year and requires small businesses and other covered entities to report the personal information of their owners and managers to the Financial Crimes Enforcement Network (FinCEN) at the Treasury Department. Although the court action grants a reprieve for filing disclosures at the end of the year, the issue must work its way through the court system in anticipation of a challenge by the Treasury Department.
East Coast, Gulf Port Strike Looms in Early 2025
On December 6, the Federation joined industry allies in a letter to the International Longshoremen's Association (ILA) and U.S. Maritime Alliance (USMX) urging both parties to get back to negotiations ASAP. As reported earlier, on November 13, the ILA walked away from the bargaining table because of ongoing concerns about automation. With the contract extension due to expire on January 16, there is a concern that a situation could arise where the ILA again goes on strike. Unfortunately, election dynamics complicate the situation. The fact that outgoing President Biden has a track record of non-intervention doesn’t bode well for his engagement during the final weeks of his Administration. Also, President-Elect Trump is on record indicating support for the ILA on the automation issue, further complicating the prospects for an agreement when he assumes office on January 20.
The Hardwood Federation has moved! The Hardwood Federation offices moved as of Friday, November 8, 2024. We will continue to co-locate with the American Forest & Paper Association in downtown Washington, D.C. Our new address is:
Hardwood Federation
601 Thirteenth Street, NW, Suite 1000N
Washington, D.C. 20005
Phone numbers and email addresses will remain the same.
Make a Difference in Washington, DC! As 2024 enters the final quarter, please consider a corporate contribution to the Hardwood Federation to support services related to the Federation’s activities that promote the U.S. hardwood industry through advocacy efforts on Capitol Hill and the Administration. With a crucial election just a few short weeks away, 2025 will present new challenges and opportunities to promote the industry. For more information on supporting the Federation, please click here.
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