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From the Executive Director - Hardwood Industry Storms the Hill in Just Two Weeks
The annual Hardwood Federation Fly-In is just weeks away. On May 14, over 70 members of the Hardwood industry including mill and yard executives, manufacturers, exporters, and association representatives will be coming to D.C. to meet with members of the Trump Administration and elected officials on Capitol Hill. We are on track to attend well over 100 meetings, sharing personal stories of how the current economic climate, the impacts of global tariffs, and declining demand are impacting the U.S. Hardwood industry. The messaging in 2025 may have glimmers of potential positives, but as well all know, there is also grave concern among industry leaders, particularly about the steep decline, and elimination of export of U.S. hardwood logs, lumber, and products to our major trading partners.
Participants in the Fly-In will focus on three key areas during their advocacy efforts in May. First and foremost, will be the impacts of the Trump Administration trade policy and the imposition of global tariffs on the U.S. Hardwood industry. While the industry as a whole favors the pursuit of fair-trade practices (and recognizes there are bad actors as well as good actors), the current situation has put many Hardwood mills in an extremely tenuous situation. We will be making a strong case that while we prefer the opportunity to pursue fair and open markets, if the current situation continues, we need financial assistance to avoid significant closures and lost capacity. Our experience in 2018 bears us out and we have data to back up our concerns. And although we were unsuccessful gaining such support during the last trade dispute, the fact that the Trump Administration has been very public about their goals to increase harvesting on federal lands gives us another persuasive talking point…harvesting that cannot happen if mill processing capacity disappears.
Our second key issue will be reviving and extending the Tax Cuts and Jobs Act tax benefits enacted in 2017. Among the tax goals for small and medium businesses are renewing and extending the 100 percent bonus depreciation benefit that has been phasing out, the research and development tax credit that has expired and the Section 199A deduction for S-Corporations and other pass-through structures that will expire at the end of this year. There is also talk that a “millionaire’s tax” raising top marginal tax rates to roughly twice what public C corporations pay will be included in the eventual package, which would hit S-Corps particularly hard. This is one provision we would definitely advocate against. Congressional leaders hope to wrap up the budget reconciliation process and finalize and pass a single, comprehensive measure before the July 4th recess. Our timing on the Hill is particularly good for this issue set.
The third issue on our list is encouraging reauthorization of the Farm Bill which has been in limbo for over two years now. Although not one of the most pressing issues of the day, the Farm Bill does traditionally include key forestry provisions, including funding for Hardwood export programs, Wood Innovation and Wood Energy Grants, and potentially training support for forestry related jobs. If time allows during Hill meetings, this will certainly be a point worth mentioning.
May 14 is the Hardwood industry’s day to be heard on the Hill. If you cannot join us in person, consider making a phone call to your elected official in the House or Senate. Let them know your Hardwood peers on the Hill, and although you can’t be there in person, you wanted to share your company’s current economic outlook. You can get phone numbers for your officials’ offices here or search for Congress.gov in your browser. Make your voice heard on May 14!!!
Issues
GOP Targets July 4th for Tax Package: Republicans’ self-imposed deadline to finish a tax and spending package is slipping from Memorial Day to the Fourth of July, as lawmakers begin to negotiate the toughest parts of President Donald Trump’s agenda. That deadline is less ambitious than Speaker Mike Johnson’s (R-La.) goal of getting the bill to Trump’s desk by May 26. However, House Republicans still aim to pass the measure through their chamber by the May holiday. The action will then turn to the Senate for next steps. The new timeline indicates that Republicans still have a number of issues to agree upon before real progress can occur, the biggest of which is how Republicans can achieve the $880 billion target in spending cuts outlined in the budget resolution adopted earlier this month. Although concerns about that cuts to Medicaid will be included in the final package, House Speaker Johnson played down that possibility saying that the focus will be on eliminating waste, fraud, and abuse, along with enacting new work requirements. Both the White House and Congressional leaders have also dismissed talk of a new “millionaire’s tax” that could impact small and medium businesses structured as S-Corps.
Trade Continues to Dominate the News: The impacts of Trump trade and tariffs policies continue to dominate the conversation in D.C. Last week it was announced that there are currently 17-19 countries currently in discussions with U.S. government officials hoping to cut a deal on trade with the U.S. and Commerce Secretary Howard Lutnick has indicated that a deal is immanent with one unnamed country pending sign off from that country’s leadership. Although important hardwood trading partners including Vietnam and Japan are on the current list, Canada, Mexico, the E.U. and most importantly China are not included. Although the Trump Administration has indicated that there are ongoing conversations with China, China has denied that meaningful discussions are underway.
The Trump Administration does seem to be adjusting their positioning over recent days. In addition to announcing ongoing trade discussions as noted above, the President also signed an order easing the impact of his auto tariffs by lifting some levies on foreign parts for cars and trucks made inside the US. However, as we have noted more than once, the Trump trade policy evolves on a seemingly daily basis.
USTR Announces Action Against Chinese Built Ships - On April 17th, the U.S. Trade Representative (USTR) announced final action on Chinese-built ships and owners and operators, along with other proposed actions to “combat unfair Chinese trade practices” related to global shipping. The action will be implemented in two phases.
The first phase includes a 180-day grace period in which no fees will be charged. Moving forward, fees will be applied to Chinese vessel owners and operators base on net tonnage per U.S. voyage starting at $50 per net ton, increasing annually by $30 increments until being capped at $140 per net ton in 2028. Fees are capped at five assessments per year and are applied only at the first point of entry to the U.S. non-Chinese operators using Chinese-built vessels will face fees at a lower rate – $18 per net ton or $120 per discharged container, rising incrementally until 2028, maxing out at $33 per net ton or $250 per container. The second phase focuses on U.S. LNG exports.
Congress is also taking action to address the situation. A bipartisan group of U.S. lawmakers will reintroduce legislation to revive American shipbuilding. The bill would put duties on vessels owned or operated by a “country of concern” — namely China, Russia, Iran and North Korea. It would also establish a 25% tax credit for shipyard investments and create a program to boost the number of US-flagged vessels over 10 years by 250. Sponsors of the bill include Senators Todd Young (R-IN) and Mark Kelly (D-AZ) and Congressmen Trent Kelly (R-MS) and John Garamendi (D-CA).
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