Kitchen & Bath Design News

NOV 2018

Kitchen & Bath Design News is the industry's leading business, design and product resource for the kitchen and bath trade.

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"China has unfairly subsidized quartz surface products to highjack the U.S. market," Davis charged. "We commend the Commerce Dept. and ITC in imposing anti-dumping and countervailing duties against the Chinese. This is a critical first step toward restoring a level playing field within our industry, fulfilling the obvious axiom: There is no such thing as 'free trade' without 'fair trade.'" But while the tariffs are being applauded in some quarters, critics sharply disagree with the strategy, contending that the duties will ultimately prove regressive, prolonging – and even escalat- ing – the trade war between the world's two top economies, while having a painful impact on both consumers and the U.S. supply chain. Critics also argue that the tariffs will make it more expensive to manufacture in the U.S., resulting in the clo- sure of businesses and the loss of American jobs. Even those who support the goal of address- ing China's alleged trade abuses have expressed concerns that the tariffs may ultimately fail to achieve their objective, and will instead increase consumer costs, erode profit margins and divert corporate resources away from investment and innovation. In the meantime, trade associations and special-interest groups tied to housing, remodeling and the cabinet industry have issued strong opinions on the tariffs, coming down hard on both sides of the issue (see related story, Page 34). Opinions regarding the potential impact of the U.S. decision to impose tariffs on foreign imports are all over the map, as designers, manufacturers and trade associations weigh in on what changes in global trade relations will mean for their businesses and the industry at large. When Duties Call WASHINGTON, DC — Kitchen and bath design firms, manufacturers, trade asso- ciations and others across the nation's housing landscape are taking a wait-and-see approach to the potential impact of the U.S. decision to im- pose tariffs on foreign imports – a decision that has sparked both controversy and uncertainty over pricing strategies, profit margins and the fate of global trade relations. The latest rounds of tariffs, imposed in July and September by the Commerce Dept. and the International Trade Commission, are aimed at billions of dollars of Chinese imports – including cabinet comp onents, appliances, lighting and countertop surfaces – many of which are widely used in kitchen/bath design, residential remodel- ing and new construction. Those levies came on the heels of duties on imports of steel, aluminum and Canadian softwood lumber. And the situation, already fluid and contentious, can become even more fraught with uncertainty on Jan. 1, when tariffs are scheduled to increase, heightening the ongoing trade war between the U.S. and China. "We're all frustrated by the shifting footing we find ourselves in regarding these tariffs," said Chris Watson, COO of Conestoga Wood Specialties, a company which, like many others, has found itself faced with the dilemma of whether to raise prices, under duress, in an effort to offset raw-material cost increases and declining profit margins. But aside from simply roiling the market, the Trump Administration's tariffs on imports have sparked spirited debate among competing economic interests, often along partisan politi- cal lines. The issues, sources tell Kitchen & Bath Design News, are clear-cut, even if opinions are widely divergent. Simply stated, supporters of the tariffs charge that Chinese manufacturers – many of whom are owned wholly or in part by the Chinese government – can offer artificially low pricing aimed at undercutting U.S. competitors, thanks to subsidies, tax rebates and other government assistance. Tariff advocates also point to alleged Chinese trade abuses related to the forced transfer of American technology and the theft of American intellectual property. The tariffs, they contend, will exert economic leverage, forcing China to level the playing field, implement fair trade practices, assure American competitiveness and correct a current trade imbalance. "[We], along with many members of our industry, welcome the finding that imports of quartz surface products from China are unfairly subsidized and will be subject to countervailing duties," said Marty Davis, president of Le Sueur, MN-based Cambria Company LLC, which recently joined other natural quartz surface producers in filing anti-dumping and counter- vailing duty p etitions with U.S. trade officials "to fight back against the flooding of unfairly traded imports…that have injured the domestic industry and threaten further damage." John Bozek, national commercial sales director at the Chicago-based Vicostone concurred: "The Chinese quartz brands have flooded the market with inferior products for the last several years and have completely impacted everyone into believing that the pricing should be at their prices, which are impossible to compete with. The tariffs will equalize the quartz business for at least one year. I feel that the major brands that manufacture with proper techniques and use proper machinery and use ingredients that are safe and are not falsely lab eled will now be able to develop the quartz business better without concern about other com- panies selling way below cost. This will help grow the quartz business with real quality products." Davis and Bozek are far from alone in that point of view. Many domestic suppliers serving the kitchen and bath market have lodged simi- lar complaints for years. " China has unfairly subsidized quartz surface products to highjack the U.S. market. We commend the Commerce Dept. and ITC in imposing anti-dumping and countervailing duties against the Chinese." Marty Davis, president, Cambria Company LLC 32 Kitchen & Bath Design News • November 2018 SPECIAL REPORT

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