It is no secret that the United States spent the past few generations deviating from the path of self-sufficiency, with American corporate purchasing departments—as well as individual consumers—becoming ever more comfortable with buying cheap foreign goods instead of the domestic products that employ their neighbors.
The pendulum had to swing back eventually, and the fact that Trump understands this was a major driver in his becoming president. His follow-through came when he implemented protectionist tariffs to try to speed up a return to domestic purchasing primacy, or at least a rebalancing of the foreign supply pool, in an effort to buy less from our main global enemy, the People’s Republic of China.
But while it is true that President Trump increased numerous tariffs, the foundation for his efforts was already in place in U.S. law. We have long had requirements that manufacturers honestly report the origin of imported goods. Additionally, for well over a century, we’ve had several country-specific tariffs and other regulatory inducements and penalties for various products from various countries.
Plywood imports are an excellent example.
We produce about 8 to 10 million cubic meters of plywood in the United States each year, depending on harvests, demand, and other factors. Depending on the year-to-year strength of new home construction, remodeling, furniture, and related industries, we have an annual market for 12 to 15 million cubic meters of plywood. This means we’ll likely always import some plywood.
Plywood is a great industry for America, serving as a base for many other industries. It’s a terrific source of employment, investment, and community building.
The wood comes from renewable forests that the industry can develop and maintain. The layers of resin that bond the multiple layers of wood together are a variety of natural and synthetic options, produced by the chemical industry from petroleum, natural gas, and various other agricultural sources. And the manufacturing process, from milling wood into veneer to assembling and compressing the components, is often a source of local employment and profit in the critical rural areas forgotten by our modern, big-city culture. In many ways, plywood is a positive societal force.
Much the same could be said of many other industries. As economist Leonard Read demonstrated in his marvelous essay, “I, Pencil,” the wonderful diversity of materials, regions, talents, and other contributions to even the most basic elements of our economy is fundamental to our civilization.
But plywood, particularly, is front and center this week because of a Department of Justice (DoJ) ruling against Boise Cascade. It found that this major plywood distributor participated in a deceptive plot to import at least $30 million worth of Chinese plywood between 2019 and 2021, all of it intentionally mislabeled as Malaysian.These goods were made in China but were illegally transshipped through Malaysia to hide their true origin and evade the punitive tariffs and countervailing duties on Chinese goods.
Boise Cascade is being fined about $6.4 million for this violation and must commit to a painful compliance plan, under which the DoJ, the U.S. Bureau of Customs and Border Protection (CBP), and other agencies will monitor its purchasing programs for the foreseeable future to prevent a repeat.
Boise Cascade purchased these products—across multiple shipments and years—from an intermediary named Horizon Plywood. During the relevant times, the government maintains Boise Cascade either knew (or should have known) that the plywood was illegally sourced and marked, as U.S. law requires that importers know the sources of the materials they buy from middlemen, especially politically and environmentally sensitive products like wood (cf. The Lacey Act).
This case should be a wake-up call to all American importers as they engage in their own supply chain rebalancing.
In part, this issue contributes to the broader effort to make the United States more self-sufficient, but it’s also about more than that; it’s about reducing our country’s specific dependence on Mainland China. Every dollar we spend on Chinese goods rewards China’s moves toward global dominance.
The American business community knows (or at least, should know, since it’s nothing new) that importing and exporting privileges exist only within a framework of regulations written and enforced with an eye to national security and foreign policy, as well as the apparently narrower arena of “trade policy.” It’s not just a matter of increasing exports and decreasing imports; it’s also about strengthening our allies, increasing our industry-specific self-sufficiency, denying enemies like Beijing the harmless-looking yet dangerous footholds they seek, and standing up for the rule of law around the world.
Regarding this last one, in particular, one might assume that international trade is straightforward, but crime is rampant.
Every U.S. importer must follow the requirements of the Customs Modernization Act of 1993, summarized in the concepts of “Informed Compliance” and “Responsible Care”—which essentially requires each importer to understand and obey federal regulations, without cover to pass the buck to Customs brokers or suppliers.
Each importer must share with Customs the total dutiable value of the goods he imports, honestly declare the country of origin, and calculate and pay the correct tariffs, taxes, and fees for each order, with a record retention system that will demonstrate compliance in the event of future audits. Getting such issues wrong can start with charges of negligence and quickly escalate to convictions for fraud, as in Boise Cascade’s situation.
Boise Cascade knew its vendor, Horizon Plywood, wasn’t making the product in the United States. If they had a legal obligation to find out where Horizon was really making or acquiring it. With proper due diligence, Boise Cascade would have discovered that this was a Chinese product merely being rerouted through a Malaysian port, not Malaysian wood being manufactured into plywood in Malaysia as was claimed.
At first glance, this looks like duty avoidance. The import tariffs on Malaysian products were lower than the import tariffs on Chinese products. But it’s really more than that.
America’s country of origin regulations—which Customs and the Federal Trade Commission primary manages—also exist to benefit the American consumer. The shopper buying furniture, cabinets, or other building supplies has a right to choose what country receives his money. If a seller lies about a product’s origin, he may as well be lying about a clothing designer, violating a patent, or abusing a UL or BBB claim, all issues that matter to the consumer. The government’s role is to defend the integrity of such claims and punish violators.
The Boise Cascade penalty is significant and appropriately draws the reader’s attention, but it should serve as a warning beacon to all importers conducting searches for new suppliers, as they generally decouple from Mainland China.
Is corporate America just ordering its purchasing departments to “cut costs, reduce tariff payments, whatever it takes,” or is it properly empowering its purchasing departments to do the necessary research, that is, to check new vendors for honesty, to verify that America’s bans on slave labor are honored, and to ensure that international trade is truly fair?
Most of all, America’s business community should be joining our government in the fight for truly fair trade—opposing such Chinese practices as deceptive valuation, currency manipulation, intellectual property theft, and classification fraud.
Every company’s re-shoring program needs a focus on these matters, both to keep American purchasing efforts honest and to keep the American business community united in support of American policy, for the mutual benefit of the free world.
Image created using AI.
John F. Di Leo is a Chicagoland-based international transportation manager, trade compliance trainer, consultant, and public speaker. Read his book on the surprisingly numerous varieties of vote fraud (The Tales of Little Pavel), his biting political satires on the Biden-Harris years (Evening Soup with Basement Joe, Volumes I, II, and III), and his collection of essays on public policy in the 2020s, Current Events and the Issues of Our Age, all available in eBook or paperback, exclusively on Amazon.
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