Wood industry proactively reduces impact from tariff policy

Source: nhandan.vn

According to the Ministry of Agriculture and Environment, if The United States imposes reciprocal tariffs on Vietnam can immediately cause orders to decrease. High tariffs will make wood products from Vietnam lose their competitive advantage, customers will seek supplies from countries with lower tariffs. In the long term, this will cause Vietnam’s wood export market to shrink, and the value brought in from forest product exports is at risk of decreasing significantly.

Producing plywood for export at Son Thuy Joint Stock Company, Hoa Binh province. (Photo: VU HOANG)

According to information from the Ministry of Agriculture and Environment, the export value of forestry products to the United States in 2024 will reach 9.417 billion USD, accounting for 54% of Vietnam’s total forestry product export turnover. In the first 3 months of 2025, it is estimated to reach 2.122 billion USD, an increase of 7.76% over the same period in 2024. If the full tax rate of 46% is applied, the cost of producing wood and wood products in Vietnam will increase by about 4.14 billion USD per year, thereby increasing the cost and reducing the competitiveness of Vietnamese wood products in the US market.

Currently, Vietnam’s wood and forest product processing enterprises are mainly small and medium-sized enterprises, many of which operate at the household scale. This makes it difficult to master the entire supply chain, invest in modernizing production and processing processes to reduce input costs and reduce product prices. In addition, the source of raw materials for wood production and forest product processing is also a disadvantage. Having to import raw materials leads to an increase in product prices, reducing the competitiveness of Vietnamese wood and forest products with other wood export markets in the world.

Vice President and General Secretary of the Vietnam Timber and Forest Products Association Ngo Sy Hoai said: “Wood and forest products are more affected than other industries because, on March 1, 2025, they were subject to an investigation into the impact of lumber imports on US national security. This investigation was conducted under Section 232 of the Trade Expansion Act of 1962, which allows the US President to impose import restrictions if an imported product threatens to harm national security. Vietnam has about 10% of the total export turnover to the US in this group of products”.

According to the Director of the Department of Forestry and Forest Protection Tran Quang Bao, the announcement from the US side shows that some items of fuel wood, wood chips, wood pellets, charcoal, logs, sawn timber, boards… will be subject to reciprocal taxes. Some wood products for interior and exterior furniture, construction wood products and other wood products have not been subject to reciprocal taxes, these items are being investigated to determine the impact of imports of logs, sawn timber and wood products (such as paper, furniture and wooden cabinets) on national security. For wood products subject to this investigation, the time for the US President to make a decision is about 270-360 days.

To proactively minimize the negative impacts from US policy adjustments on all wood products, Mr. Tran Quang Bao said that the Department of Forestry and Forest Protection is actively monitoring the US trade policy adjustments and the response measures of US trading partners. The Department promptly assesses the impacts and proposes solutions to limit negative impacts on Vietnam’s wood processing industry.

The Department of Forestry and Forest Protection coordinates with relevant units to closely monitor the US Department of Commerce (DOC) investigation into the threat to national security from the import of logs, sawn timber and wood products to have timely and appropriate solutions for Vietnam’s wood processing industry. The Department continues to coordinate with relevant units to effectively implement the commitments with the US in the Legal Timber Agreement; Memorandums of Understanding (MOUs) and Letters of Intent (LoI) on cooperation in the forestry sector with the US.

In addition, the Vietnam Timber and Forest Products Association also proposed that the Government consider a fiscal and monetary support package equivalent to the Covid-19 pandemic period to reduce difficulties for businesses because this is an industry that uses a lot of human resources, high labor costs, and a small profit margin.

Orders are decreasing, the US market is shrinking, product prices are increasing, leading to a decrease in demand, and the competitiveness of Vietnamese goods is decreasing. These things will affect liquidity, and some businesses are even at risk of liquidity failure.

According to Mr. Ngo Sy Hoai, Vietnamese wood is currently exported to 161 countries and territories, but in recent years, businesses have focused too much on the US market and have not paid due attention to market diversification. In the current context, market diversification needs to be considered and raised more appropriately.

Mr. Ngo Sy Hoai analyzed: “Previously, we only exported wood chips and wooden furniture to Japan, now we need to research deeply processed products to supply to this market because Japan is a potential market for exporting wooden furniture.

With the Chinese market, we used to only export wood chips, but through research, Chinese people are also very interested in Vietnamese rattan and bamboo products. The Korean market used to only export plywood and wood pellets, this market is very favorable in terms of logistics transportation for businesses to promote the export of other forest products.

With the European Union (EU), it is also very favorable because of the Vietnam-EU Free Trade Agreement (EVFTA), but exports to this market only account for 3.8-4% of total wood export turnover. A series of other markets such as the UK, Russia, the Middle East, South America or ASEAN also have a lot of untapped and unexploited potential. These are markets that businesses need to research soon to make up for the shortage when the US market imposes reciprocal tariffs”.

In addition, the domestic market with more than 100 million people, if businesses have better distribution policies, invest in research to meet the needs of urban and rural residents, will be a good channel for product consumption.

Deputy Director of Son Thuy Joint Stock Company (Hoa Binh province) Nguyen Thi Thu Huong said that when there was information that the US increased import tax on wood products entering the market of this country, businesses were very worried, even though the US is not yet the main market. In the coming time, to ensure revenue and jobs for workers, the company has increased domestic and foreign trade promotion activities, looking for markets for sustainable consumption and export.

In parallel with finding solutions, diversifying markets, reducing input production costs, in the long term, wood industry businesses need to change their business models. They need to shift from mainly processing orders from importers to proactively designing and building brands to increase business efficiency and profit margins.