August 23, 2018 may have been a normal Thursday for many, but it was an eventful day for Georgia’s forest products industry. On that day, China followed through with its promise to impose a 25 percent tariff on all imports of Southern Yellow Pine (SYP) logs coming from the United States. Meaning that overnight, log imports from the South became 25 cents on the dollar more expensive than they were on August 22—a crushing blow to U.S. exporters vying in what was already a very competitive market.
Peeples Industries, Inc. was among the Georgia forest product companies most directly affected by the new tariffs. The company operates a marine terminal in Savannah and has been at the center of what has been an exciting new market for Georgia’s forest products over the past half-decade.
“Over the last six years we have worked hard with industry partners to develop a market for southern pine in China. We’ve brought skilled jobs to our communities and value to Georgia land owners while lowering our trade deficit” said Frank Peeples, president of Peeples Industries, Inc. “But Chinese buyers lived without our logs for many years and now have more options. These tariffs not only hurt my business and our industry’s competitiveness, they take a human toll. They simply shouldn’t cost hardworking Georgians their jobs.”
The hard work that Frank alludes to isn’t simple hyperbole. According to the Georgia Ports Authority, the “Logs and Lumber” category of exports out of the Savannah Port has experienced tremendous 100 percent growth from 2013 to 2017. Retail Consumer Goods, the next highest commodity group, only experienced 34 percent growth, while many other groups saw single digit or even negative growth.
As with any commodity in a global marketplace, however, when one source of a product becomes less desirable, there are many other suppliers ready and willing to fill the void. And, because the US South is a relative newcomer to the Chinese log import market with many other well-established exporters, Southern log exporters are price takers—not price setters. This effectively means SYP exports are priced out of this market.
Log exports may not be alone for long, however. China has also threatened to impose tariffs on a wide variety of forest products exports, including chemical wood pulp and kraft linerboard.
“These are very troubling developments,” said Andres Villegas, President and CEO of the Georgia Forestry Association. “Access to a healthy global marketplace through our exports are an influential part of what helps make Georgia the number one forestry state in the nation. Without healthy markets, the health of our forests and forest landowners are threatened. For that reason, GFA will continue to raise awareness about this critical issue with our state’s Congressional delegation and beyond.”
There are reports this week that Washington is seeking a new round of trade talks with China. The Georgia Forestry Association and Peeples Industries will be among the many in our state and around our nation watching closely from afar in the hopes that a positive path forward can be reached.