Did steep U.S. tariffs on Russian plywood actually cut imports? Maybe
When Russia invaded Ukraine, the United States imposed sanctions and tariffs designed to slow the Russian economy — including steeper tariffs on lumber from the nation’s vast and lucrative timber industry.
But a study released Thursday by the environmental group EarthSight found that while tariffs helped cut U.S. imports of plywood from Russia in half from 2021 to 2022, outpacing an overall decline in plywood imports from all nations of 18 percent, Russia remains the second-largest foreign supplier of plywood to the U.S. The U.S. directly imported at least $1.2 billion worth from Russia in 2022.
Plywood remains one of the largest sectors of shipments of goods other than gas and oil coming directly from Russia and its ally Belarus into the U.S., accounting for roughly half of all Russian consumer goods landing on American shores from November 2022 to January, according to an analysis of Russian export and U.S. import records by EarthSight.
After Russia launched its invasion in February 2022, the U.S. placed a hefty 50 percent tax on Russian and Belarusian plywood. The European Union and United Kingdom banned Russian wood products altogether.
“It’s a scandal,” said Sam Lawson, director of London-based EarthSight. “I think most U.S. consumers will be shocked.”
Lawson said that “U.S. consumers are under the impression that the U.S. is doing everything it can to isolate Russia economically. The reality is that there are still large areas of improvement available for great sanctions. And this is one of the most important ones.”
EarthSight called for the U.S. to follow the E.U. and the U.K. and ban Russian timber imports, and to sanction a Russian oligarch who owns a large stake in an exporting lumber mill.
EarthSight also raised concerns about whether timber is being felled from vast forests owned by the Russian military, so that plywood sales indirectly benefit its armed forces. The forests, including one in Irkutsk, have produced more than 1 million cubic meters of timber in a year. Since the war’s start, independent inspectors have left Russia, making it more difficult to know where the wood goes.
Yehor Hrynyk, a Kyiv-based forest conservationist with the Ukrainian Nature Conservation Group, said, “When you buy something from Russia nowadays, you are basically supporting the Russian war machine.” He counts several of his colleagues among the war dead.
Plywood imported from Russia and Belarus is typically higher-grade, often made from Baltic or Russian birch, and used mostly in construction and furniture.
The largest single U.S. importer of Russian plywood identified by EarthSight is PG Wood Imports based in suburban Atlanta, which imported a third of the Russian timber products arriving at U.S. ports during the past six months, averaging three shipping containers a day.
Company officials did not respond to requests for comment. NBC News confirmed that at least 100 plywood shipments to PG Wood Imports came directly from Russia, according to import data from Panjiva, a supply chain research group.
One of PG Woods Russian suppliers is Vyatsky Plywood, a subsidiary of Segezha Group, which is mostly owned by the Moscow-based conglomerate Sistema Group. Sistema was founded three decades ago by Vladimir Yevtushenkov, with stakes in telecommunications, hotels, online retail and pharmaceutical concerns.
Yevtushenkov is close enough to the regime that he was among the inner circle of 37 oligarchs who met with Putin in the Kremlin on Feb. 24, the day Russia invaded Ukraine. In April, he was personally sanctioned by the U.K. The U.S. has not sanctioned either Yevtushenkov or his companies.
Vyatsky Plywood was among the largest plywood suppliers from Russia to the U.S. in recent months, with shipments topping 1,200 cubic meters a month, according to EarthSight's analysis of Russian export and U.S. import records.
Lawson called for further sanctions on Yevtushenkov and his companies. “The flow of money to him needs to stop,” Lawson said.
Yevtushenkov did not immediately respond to a request for comment.
The U.S. Commerce Department did not immediately respond to a request for comment.
While direct shipments from Russia continue into the U.S., some products made from Russian timber are shipped indirectly and avoid higher import tariffs.
In September, Environmental Investigation Agency found some Russian birch was sent through Vietnam and China before getting shipped to the U.S. Since it was no longer labeled Russian birch, it was not subject to steep U.S. tariffs.
One country that increased its plywood exports to the U.S. in 2022, according to EarthSight’s analysis, was Turkey, which neighbors Russia on land and on the Black Sea.
Hrynyk, who also tracks Russian timber exports, said he has seen Russian birch plywood routed through Kazakhstan to evade European Union sanctions.
But, Lawson said, “the biggest problem is direct shipments to the U.S.”
In July, Pavel Chashchin, head of Russia’s Federal Forest Management Agency, told the Russian news service Tass that Russia would not “suffer much” from sanctions because of strong demand, particularly from Asia. Among the U.S. companies that continued trade with Russia, according to SEC filings, is International Paper Co., based in Memphis, Tennessee, the world’s largest pulp and paper maker. Since 2007, it has operated Ilim Group, a joint venture half owned with Russian partners, that ranked among Russia’s largest pulp and paper businesses. It was a lucrative part of International Paper.
International sanctions were affecting the company, International Paper told shareholders last year. The company said it was looking at selling its half of the company. International Paper announced in January it is selling its stake to its Russian partners for $508 million. A date for the sale has not been announced, and is pending regulatory approval in Russia.
International Paper told NBC News it is working to end its involvement in the joint venture as soon as it can.
This article was originally published on NBCNews.com