How to protect the U.S. forest products industry from the perspective of trade? A comparison of policies within the forest supply chain

Abstract

With the accelerating globalization, many industries have faced continuous pressure from increasing importation. To protect the domestic industries, trade policies such as uniform tariffs have been widely used in recent years. In this study, the interaction between uniform tariffs on the primary roundwood and secondary wood and paper products within the U.S. forest supply chain is assessed. A two-stage partial equilibrium displacement model is firstly developed within a two-input and two-output system, estimating both the vertical and horizontal linkage between primary and secondary forest products. Four scenarios are assessed: single-tariff separately imposed on roundwood/paper/wood products, and simultaneously imposed on all of them. To test the parameter uncertainty, stochastic simulations are employed by randomly changing elasticities under a triangular distribution. The results show that the impacts of U.S. import tariffs on different categories of forest products vary through the forest supply chain. Although the U.S. consumers of wood and paper products in general suffer from its import tariffs, timber landowners better off in all tariffed scenarios. In designing policies to protect the U.S. forest products industry, import tariffs on secondary wood products are encouraged, compared with tariffs on other forest products.