Wood industry in southern Brazil hit by U.S. tariffs, exposing dependence on American market

The wood industry of Rio Grande do Sul, responsible for more than R$500 million in annual exports to the United States, is facing its biggest challenge in years. With the new 50% tariff imposed by U.S. President Donald Trump in early August, companies have already begun cutting shifts, suspending contracts, and halting production lines.

According to data from the Federation of Industries of Rio Grande do Sul (Fiergs), the sector employs around 16,000 people and accounted for 11% of the state’s net industrial revenue in 2023. In addition, more than one-third of its exports go exclusively to the U.S., underscoring the state’s heavy dependence on the North American market.

Immediate impact on jobs
With the sharp reduction in shipments, thousands of workers are already feeling the effects. “We are beginning to see the first concrete impacts, the consolidation of statistics and forecasts in the companies’ economic activity,” said Giovani Baggio, chief economist at Fiergs.

Companies in the sector report difficulties in maintaining production. Without alternative markets in the short term, some factories have reduced shifts, while others suspended temporary contracts or simply shut down certain lines.

Why is Rio Grande do Sul so dependent on the U.S.?
The relationship between the state’s wood industry and the U.S. is not only economic, but also cultural. The main items exported by the state—pine fences, residential moldings, and plywood panels—are produced almost exclusively to meet U.S. consumption.

In Brazil and other countries, demand for these products is small or virtually nonexistent. The most emblematic example is wooden fences:
In the U.S., they are part of everyday life, found in the backyards of nearly every home.

In Brazil, this type of product has no tradition. Here, the preference is for concrete, which makes it impossible to develop a strong domestic market.

“Here we use concrete. Over there, every house has a backyard fence. So there is no substitution; the domestic market is smaller and we depend on exports,” said Leonardo de Zorzi, president of the Wood Industry Union of Rio Grande do Sul (Sindimadeira).

Sectors affected beyond wood
Although the impact is most severe in the wood sector, the new tariffs have also hit other areas of the Brazilian economy heavily dependent on exports to the U.S. Among the most affected products are coffee, beef, fruit, and fish.

Challenge ahead
Seeking new markets emerges as an alternative, but experts say this transition will not be immediate. The U.S.’s consumption habits and specific demand have created a dependence that is difficult to break.

See below a history of Brazilian wood exports to the United States from January to July 2022 to 2025. The chart was prepared with DataLiner data and excludes cabotage, transshipment, and domestic movements.

Wood Exports to the United States | Jan 2022 to Jul 2025 | WTMT

Source: DataLiner (Click here to request a demo)

Meanwhile, the effects of the tariff shock are already being felt by families in Rio Grande do Sul, especially in municipalities where the wood industry is the main source of income.

Source: Clic Camaquã 

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