Countering the Countervailing Duties on Plywood

When the ITC (International Trade Commission) agreed to impose anti-dumping countervailing duties on plywood in April 2013, the Chinese imports increased nearly 75% in price. The basic premise for such tariffs is that because the Chinese government underwrites their nation’s plywood industry, the viability of our domestic plywood industry is threatened. As a result, the US government gets involved to basically “level the playing field.” Well, that leveling is no longer seen as necessary by the ITC, so as of the unanimous November 2013 vote, the duties are being repealed.

By the change, the ITC is, in essence, saying that they don’t believe the US plywood industry was being affected by the (lower priced) imported plywood. Are they right? Whether they are or aren’t, it seems as if some missteps by the domestic plywood manufacturers may have led to the November 2013 repeal.

In April 2013, when the tariff was enacted, the US plywood manufacturers certainly stood to benefit. The Chinese products increased in cost by at least 23% due to the Countervailing Duty. Combined with the Anti-Dumping tariff that followed, Chinese plywood pricing jumped up by 74%. As a result, their domestic counterparts certainly stood to benefit by increased business. However, U.S. plywood manufacturers seem to have become a bit greedy, increasing their own prices by between 7 and 10%. Supposedly, the price increase on domestic manufacturers had nothing to do with the tariff, but it certainly seemed like interesting timing.

In about 2 months, the Chinese imports at the lower, tariff-free price, will begin to arrive on our shores. When it does, many customers will probably stick with the higher priced domestic product, since they realize that superior quality comes with that higher price. At the same time, not all imported plywood is poor quality. For some applications, B grade or even “shop grade” is exactly what you want, and you don’t want to have to pay a premium price for utilitarian uses. Sure, builders can often pass along the increased prices to their customers, but they’ll definitely be able to breathe a little easier when they don’t have the extra overhead to worry about.

At J. Gibson McIlvain, we realize how much government policies and fluctuations can affect the lumber market on a global scale. This levy and counter-levy situation with plywood is just one of many scenarios we study as we carefully determine when and how much material to purchase for our inventory. We want the best materials at the most economical price possible for our customers, just like you do, for yours.

For many of our customers, low-priced premium Birch panels will be welcomed back to our inventory, even while current-priced inventory slowly leaves the scene. Hopefully, we’ll also see a price drop in domestic plywood, soon. Even more importantly, the next time the government intervenes and prices drastically change, we’ll be right there with you, once again, trying to figure out just the right time to buy.

J. Gibson McIlvain Company

Since 1798, when Hugh McIlvain established a lumber business near Philadelphia, the McIlvain family has been immersed in the premium import and domestic lumber industry. With its headquarters located just outside of Baltimore, the J. Gibson McIlvain Company (www.mcilvain.com) is one of the largest U.S. importers of exotic woods.

As an active supporter of sustainable lumber practices, the J. Gibson McIlvain Company has provided fine lumber for notable projects throughout the world, including the White House, Capitol building, Supreme Court, and the Smithsonian museums. Contact a representative at J. Gibson McIlvain today by calling (800) 638-9100.