Implications of COVID-19 on Tennessee Exports of Forest Products
Creators: name: Muhammad, Andrew
name: Taylor, Adam
name: Muhammad, Andrew
name: Taylor, Adam
Publisher: name: Unknown
Year: 2020
Subjects: subject: Demand and Price Analysis
subject: International Relations/Trade
subject: Resource /Energy Economics and Policy
subject: COVID-19
subject: exports
subject: forest
subject: products
subject: Tennessee

description: The coronavirus (COVID-19) pandemic has spread across the globe since the first death in China in early January 2020. As COVID-19 began to spread across the U.S. in March 2020, businesses closed and individuals were asked to limit trips and comply with shelter-in-place or stay-at-home orders (Baker et al., 2020). Countries around the globe imposed similar measures. Consequently, the pandemic has negatively affected the global economy beyond anything experienced in nearly a century. Estimates so far indicate the virus could decrease global economic growth by 3.0 percent to 6.0 percent in 2020 (Jackson et al., 2020). While there have been extensive stories about the impact of COVID-19 on the U.S. food supply, little has been reported on how agriculture-related products primarily used in manufacturing have been impacted by COVID-19. In this report, we examine how the COVID-19 outbreak affected Tennessee forest product exports. The impacts of COVID-19 on forest products are due to supply and demand disruptions in both the finished wood products markets (e.g., furniture) and the interrelated market for raw materials and inputs (e.g., logs and lumber). Labor disruptions due to COVID-19 have resulted in decreased incomes, resulting in decreased demand for furniture and other finished wood products. Lockdowns and stay-at-home orders have limited shopping, also decreasing demand for these products. Given that labor is a primary resource for production, distribution and sales, stay-at-home and lockdown orders have also contributed to decreased sales due to limited product availability. Statista (2020) reported that U.S. furniture sales decreased by 21 percent in March and decreased by 49 percent in April when compared to previous months. U.S. imports of furniture and home furnishings were down $1.2 billion as of April 2020 when compared to same period (January-April) in 2019 (Census, 2020). This phenomenon is not limited to the U.S. (Jackson et al., 2020). Any decrease in demand for finished wood products in turn negatively affects the demand for forest products. It must also be noted that forest product sales, and exports in particular, have also been directly impacted by COVID-19. Labor disruptions have affected both production and distribution of forest products. Restrictions on movement have also affected transport and other trade-/market-facilitating activities (WTO, 2020), all of which have negatively affected Tennessee forest product exports. Like many forest-product exporting states, Tennessee exports mainly go to manufacturers in China. For instance, China accounted for almost half of Tennessee’s forest product exports in 2017 (Luppold et al., 2018; U.S. Department of Agriculture, 2020). Being so reliant on China for sales, Tennessee was particularly impacted by the U.S-China trade war, which is discussed briefly in this report and in a UT Extension report published earlier this year (Muhammad and Smith, 2020). More importantly, 2020 was expected to be a recovery year for U.S. exports due to the U.S.-China Phase One Trade Agreement (signed January 2020) and the announcement in February 2020 by China’s State Council Tariff Commission that U.S. commodities including forest products would be exempt from retaliatory tariffs (Inouye, 2020). Thus, it is conceivable that Chinese imports would have returned to pre-trade war levels in 2020. However, recent data show that not only did the COVID-19 outbreak thwart this potential recovery, but resulted in even greater losses when compared to 2019. In this report we examine how the COVID-19 outbreak impacted Tennessee forest product exports. To put this in context, we provide a background and overview of Tennessee production and exports and briefly discuss how the U.S.-China trade war impacted Tennessee. To assess the impacts of COVID-19, we examine the most recent trade data for 2020 and assess how Tennessee and U.S. exports in January-April 2020 compare to the same period in previous years. We close the report with a brief summary and implications.