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Trade Wars, Tariffs and the Flooring Industry

Posted by Gary Feldman on September 21, 2018

Whether or not you agree with the current administration’s trade policy often depends upon your political affiliation, but also on how it affects your company or you as an individual. The latest round of tariffs announced by the Trump administration includes a myriad of flooring products including vinyl, wood (engineered and solid), bamboo, cork, carpet (tufted and woven) and ceramic tile (glazed and unglazed).

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The action was announced by U.S. Trade Representative Robert Lighthizer on behalf of President Trump. The tariff will start at 10% but could increase to 25% by year end. A public comment period, during which the Office of the U.S. Trade Representative is seeking comment to the Section 301 Committee, runs through August 17. A final decision will be made August 18, and resulting action will be taken August 31.

On a recent story on the NPR show Marketplace, Eric Astrachan of the Tile Council of North America voiced support for the tariff due to “consistently mislabeling tile products as porcelain”. Porcelain tile is defined as an impervious tile with a water absorption of 0.5% or less as measured by the ASTM C373 test method. There are, however, many instances in which tile not meeting this standard is advertised and sold as porcelain tile. Chinese ceramic tile currently costs approximately $0.87 and many believe US production and alternative sourcing can replace Chinese tile at competitive prices without negative impact on US consumers.

Mohawk Industries, the Calhoun, Ga.-based carpet and hardwood floors maker headed by Chattanooga billionaire Jeff Lorberbaum, has asked the U.S. Trade Representative to impose import duties on Chinese-made ceramic, laminated wood, plastic and particle board flooring. Mohawk, known for its carpeting also acquired the IVC Group in 2016 and is also a leader in vinyl flooring.

Similar views are being expressed across the industry but not exclusively. Floor Covering Institute president Jim Gould told Floor Covering Weekly

In spite of all the new domestic production capacity, the demand has outstripped the country’s ability to supply. Most manufacturers are sold out and are supplementing their supply from Asia.

Stuart Hirschhorn, director of Catalina Research also noted that,

Chinese manufacturers accounted for almost half of all U.S. sales in this flooring category. The impact would be greatest in the soaring LVT market, where Chinese-made products capture about two-thirds of the total U.S. market.”

Luxury Vinyl Tile (LVT) and other laminate flooring is often sold in boxes directly to consumers or contractors and would likely be most impacted by the proposed tariffs.

Like most of the recent tariffs, companies are taking advanced action now. If you import from China, now is the time to increase stocking quantities while prices are still low. If you compete with China, now is the time to take the steps to increase production to take up on potential increase in demand.

Topics: International Trade, Flooring Industry, CTNA

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