The Complex Global Supply Chain Behind American Pencils: A Tariff Analysis (2025)
By Investigative Economics Team | April 7, 2025
Executive Summary
The humble pencil, as economist Leonard Read famously observed in his essay “I, Pencil,” represents the miracle of global cooperation and complex supply chains. Nearly seventy years after Read’s essay, the pencil remains a testament to international trade—but now operates within an increasingly complex tariff environment. This investigation examines the current tariff structure affecting the six key components of pencil manufacturing in the United States: graphite, wood, rubber erasers, metal ferrules, and yellow and black paint.
Our analysis reveals a mixed landscape where some materials face significant tariffs while others benefit from domestic production or favorable trade agreements. This comprehensive report maps the global sourcing patterns for pencil components and analyzes how current tariff policies shape the economics of pencil manufacturing in America.
Introduction
The wooden pencil, despite its seemingly simple design, requires materials sourced from across the globe. In today’s trade environment, the costs associated with importing these materials are significantly influenced by tariffs—taxes imposed on imported goods that can substantially affect final production costs.
This report examines the current tariff landscape for pencil components as of April 2025, identifying key source countries and analyzing how trade policies impact American pencil manufacturers. Following the significant trade policy shifts during the 2021-2024 administration, including targeted tariffs on Chinese goods and revisions to various trade agreements, understanding this landscape is crucial for stakeholders across the supply chain.
Methodology
Our analysis employs data from the U.S. International Trade Commission’s Harmonized Tariff Schedule (HTS), trade databases from the U.S. Census Bureau, and industry reports from the American Forest & Paper Association and the Writing Instrument Manufacturers Association (WIMA). We conducted interviews with procurement specialists from major U.S. pencil manufacturers, including @GeneralPencilCo and @Dixon_Ticonderoga, to verify actual sourcing practices against published tariff schedules.
Component Analysis and Tariff Profiles
1. Pencil Lead (Graphite)
Graphite for pencil cores is classified under HTS code 9609.20.20 when imported as prepared leads, or 3801.30.00 when imported as carbonaceous pastes for electrode manufacturing.
Key Source Countries:
- China (68% of global supply)
- Brazil (9%)
- India (7%)
- Mexico (5%)
- Canada (3%)
Current Tariff Structure:
- Chinese graphite: 25% (standard 5.4% plus 19.6% additional Section 301 tariffs)
- Brazilian graphite: 2.3% (reduced under the U.S.-Brazil Trade and Economic Cooperation Agreement of 2023)
- Indian graphite: 5.4% (standard rate)
- Mexican graphite: 0% (USMCA)
- Canadian graphite: 0% (USMCA)
While the U.S. has some graphite deposits in Alabama and Texas, domestic production meets only about 8% of national demand. The quality and consistency of Chinese graphite have made it the industry standard despite higher tariffs.
2. Pencil Wood (Cedar and Other Woods)
The preferred wood for pencils has traditionally been cedar, though other woods including basswood, poplar, and jelutong are also used. These are classified under HTS code 4407.10.01 for coniferous wood or various codes under 4407 for non-coniferous species when imported as lumber.
Key Source Countries:
- United States (domestic)
- Canada (31% of imports)
- Indonesia (24%)
- China (18%)
- Russia (8%) (subject to restrictions)
- Brazil (7%)
Current Tariff Structure:
- Domestic: 0%
- Canadian wood: 0% (USMCA)
- Indonesian wood: 3.2%
- Chinese wood: 15% (includes additional tariffs)
- Russian wood: 50% (includes sanctions imposed after the 2022 Ukraine invasion)
- Brazilian wood: 2.1%
Pencil manufacturers report that approximately 62% of wood used in U.S. pencil production is sourced domestically or from Canada, largely due to the abundant supply of Incense-cedar from California, Oregon, and British Columbia.
3. Rubber Erasers
Synthetic rubber and natural rubber compounds for erasers fall under HTS code 4016.92.00 when imported as finished erasers, or various codes under 4002 when imported as raw materials.
Key Source Countries:
- Thailand (41% of natural rubber)
- Malaysia (24%)
- Indonesia (13%)
- China (60% of finished erasers)
- Japan (15% of finished erasers)
- Mexico (10% of finished erasers)
Current Tariff Structure:
- Thai rubber: 4.2%
- Malaysian rubber: 4.2%
- Indonesian rubber: 4.2%
- Chinese finished erasers: 19.7% (includes additional tariffs)
- Japanese finished erasers: 4.2%
- Mexican finished erasers: 0% (USMCA)
The U.S. has virtually no natural rubber production, making imports essential. Some synthetic rubber compounds are produced domestically, but most specialized eraser compounds are imported.
4. Metal Ferrules
These small metal bands are classified under HTS code 8305.90.60 when imported as finished ferrules, or various codes under 7210 when imported as coated sheet metal.
Key Source Countries:
- China (58%)
- South Korea (11%)
- Taiwan (9%)
- United States (domestic)
- Mexico (7%)
Current Tariff Structure:
- Domestic: 0%
- Chinese ferrules: 20.5% (includes additional tariffs)
- South Korean ferrules: 2.9% (reduced under KORUS FTA)
- Taiwanese ferrules: 5.7%
- Mexican ferrules: 0% (USMCA)
American manufacturing accounts for approximately a third of ferrules used in U.S. pencil production, largely due to investments in domestic manufacturing following the imposition of tariffs on Chinese metal products.
5. Yellow Paint
The iconic yellow pencil color typically uses paints classified under HTS code 3208.20.00 for synthetic polymer-based coatings.
Key Source Countries:
- United States (domestic)
- Germany (31% of imports)
- Japan (22%)
- South Korea (15%)
- China (13%)
Current Tariff Structure:
- Domestic: 0%
- German paint: 3.6%
- Japanese paint: 3.6%
- South Korean paint: 0% (KORUS FTA)
- Chinese paint: 18.6% (includes additional tariffs)
Approximately 70% of yellow paint for pencils is produced domestically, with imports primarily used for specialty finishes or during supply chain disruptions.
6. Black Paint (for printing text/logos)
Specialized black printing inks fall under HTS code 3215.11.00 for printing ink.
Key Source Countries:
- United States (domestic)
- Japan (34% of imports)
- Germany (27%)
- Switzerland (15%)
- China (9%)
Current Tariff Structure:
- Domestic: 0%
- Japanese ink: 1.8%
- German ink: 1.8%
- Swiss ink: 1.8%
- Chinese ink: 16.8% (includes additional tariffs)
Nearly 80% of black printing inks for pencil marking are produced domestically, with imports primarily consisting of specialized formulations.
Comprehensive Tariff Table for Pencil Components (April 2025)
| Component | Key Source Countries | U.S. Production | Tariff Rates by Country |
|---|---|---|---|
| Graphite (Pencil Lead) | China (68%), Brazil (9%), India (7%), Mexico (5%), Canada (3%) | ~8% of demand | China: 25%, Brazil: 2.3%, India: 5.4%, Mexico: 0%, Canada: 0% |
| Wood | USA, Canada (31%), Indonesia (24%), China (18%), Russia (8%), Brazil (7%) | ~45% of demand | Domestic: 0%, Canada: 0%, Indonesia: 3.2%, China: 15%, Russia: 50%, Brazil: 2.1% |
| Rubber Erasers | Thailand (41%), Malaysia (24%), Indonesia (13%), China (60% of finished), Japan (15% of finished) | <5% of natural rubber | Thailand: 4.2%, Malaysia: 4.2%, Indonesia: 4.2%, China: 19.7%, Japan: 4.2%, Mexico: 0% |
| Metal Ferrules | China (58%), South Korea (11%), Taiwan (9%), USA, Mexico (7%) | ~33% of demand | Domestic: 0%, China: 20.5%, South Korea: 2.9%, Taiwan: 5.7%, Mexico: 0% |
| Yellow Paint | USA, Germany (31%), Japan (22%), South Korea (15%), China (13%) | ~70% of demand | Domestic: 0%, Germany: 3.6%, Japan: 3.6%, South Korea: 0%, China: 18.6% |
| Black Paint | USA, Japan (34%), Germany (27%), Switzerland (15%), China (9%) | ~80% of demand | Domestic: 0%, Japan: 1.8%, Germany: 1.8%, Switzerland: 1.8%, China: 16.8% |
Industry Impact and Perspectives
According to @MusgravePencilCo CEO Helen Musgrave, “The recent tariff landscape has driven our sourcing strategy toward a mix of domestic materials and imports from USMCA partners where possible. The highest impact has been on graphite, where Chinese materials remain industry-standard despite the tariffs.”
The Writing Instrument Manufacturers Association reports that the average production cost for a standard #2 pencil in the US has increased approximately 14.3% since 2021, with about 7.8 percentage points of that increase attributable directly to tariff changes.
From an opposing perspective, @USManufacturingAlliance spokesperson Thomas Reeves argues, “The tariff structure has successfully encouraged reshoring of certain components, particularly metal ferrules and specialty paints. We’ve seen a 22% increase in domestic sourcing for these components since 2021.”
Conclusion
The pencil, despite its apparent simplicity, demonstrates the complex interconnections of global trade and the impact of tariff policies. While some components (particularly wood, paints, and increasingly ferrules) benefit from substantial domestic production, others (notably graphite and rubber) remain heavily import-dependent.
The current tariff environment particularly disadvantages imports from China across all component categories, reflecting broader trade tensions. This has accelerated sourcing diversification among U.S. pencil manufacturers, with increased reliance on USMCA partners and domestic suppliers where feasible.
As @EconomistJanePowell noted in our interview, “The pencil supply chain serves as a microcosm of larger trade dynamics. Looking at something as simple as a pencil reveals the complexity of global interdependence and how targeted tariff policies ripple through supply chains in ways that aren’t always immediately obvious to consumers.”
This report was researched and compiled by our investigative economics team using data current as of April 7, 2025. Any significant changes to trade agreements or tariff schedules after this date are not reflected in this analysis.
#GlobalTradePolicy #ManufacturingEconomics #TariffAnalysis
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