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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Other companies are seemingly in the same boat. For instance, according to Nemo Tile + Stone, Chinese imports of porcelain, stone and ceramic and glass tile that arrive prior to Jan. 1 will face no price change, according to Matthew Coburger, director of product merchandising. However, if a product arrives after Jan.1, when threatened new tariffs are implemented, the company "must re- quote projects," Coburger said. Products manufactured in Europe, the U.S. and elsewhere in Asia will not be affected, Coburger noted, adding that Nemo Tile + Stone is reviewing all manufacturing options, and seeking "alternative product solutions to miti- gate the impact of this tariff on customers." " Every cabinet manufacturer in the U.S. is, or will be, affected by plywood cost increases." Chris Watson, COO, Conestoga Wood Specialties Cabinet Component Suppliers Sharply Divided on Tariff Issue THE ESCALATING TRADE WAR between the U.S. and China has added fuel to a contentious war of words between domestic suppliers of hardwood plywood and the importers who supply U.S. cabinet manufacturers with Chinese hardwood plywood. Tensions between the sides, simmering for years, have been stoked by recent decisions by the International Trade Commission (ITC) and the U.S. Dept. of Commerce to impose steep anti-dumping and countervailing duties on Chinese hardwood plywood, which is widely used by U.S. cabinet manufacturers. The ITC and Commerce Dept. actions, according to the Coalition for Fair Trade of Hardwood Plywood, provide "meaningful relief for the U.S. hardwood plywood industry, and confirm that illegal trade practices from China will not be tolerated." The coalition, an organization of domestic hardwood plywood suppliers, has long claimed that U.S. hardwood plywood suppliers have been materi- ally damaged by a rising tide of "illegal" Chinese trade practices – including dumped and subsidized imports – forcing many domestic suppliers to close factories, lay off workers and operate at less than full capacity. "Over the past two years, imports of hardwood plywood have increased by 35% to 40%, decimating the U.S. hardwood plywood industry and hurt- ing American workers," said the coalition, which for years has urged U.S. trade officials to take action against "unfairly traded" Chinese imports. Hardwood plywood from China, the coalition charged, have been sold "at dumped prices, and that is hurting American jobs." "Dumping" is a tactic by which a company exports a product at a price significantly lower than what it normally charges in its home market. Anti-dumping duties are protectionist tariffs imposed on imports believed to be priced below fair market value. The ITC and Commerce Dept. actions "demonstrate that the U.S. gov- ernment will not tolerate unfair trade practices and will support American manufacturing and workers," said Kip Howlett, president of the Decorative Hardwoods Association, whose members produce much of the hardwood plywood and hardwood veneer manufactured in North America. The anti-dumping and countervailing duties "put American interests first by standing up to illegal imports of Chinese hardwood plywood," Howlett said. The duties, however, have been met with stiff opposition from other trade groups. Among the most ardent of tariff critics is the International Wood Prod- ucts Association (IWPA), a trade group that represents some 200 compa- nies that import hardwoods and softwoods. "It's critical to note that the wood products found throughout our homes, as well as in the manufactured goods we use each day, are not made from a simple interchangeable commodity," said IWPA Executive Director Cindy Squires. "Many of the wood species that IWPA members import do not grow in North America, and some wood products are not manufactured in the U.S." Because of that, Squires said, "new tariffs on wood products sourced in China would not serve to level the playing field for U.S. manufacturers, [but instead] would increase prices for U.S. manufacturers that depend on wood products imports to provide the highest-quality products at the most competitive price." Squires said that U.S. businesses in the kitchen cabinet and home-build- ing industries will "see their input costs soar and their profit margins shrink" if new tariffs on wood products are to be implemented. "China is also a critical market for U.S. wood products exporters, and our industry could be squeezed to the breaking point if China were to retaliate with additional tariffs on U.S. exports," Squires observed. In agreement with that point of view is the American Alliance for Hardwood Plywood (AAHP), an alliance of importers, distributors, manu- facturers and retailers of hardwood plywood which, the association claims, "outnumber domestic plywood employees by more than 30 to 1 [and] now face competition from imported cabinets that can utilize Chinese plywood free from duties." "The high duty figure is sure to be touted by the small group of domestic plywood producers to sow uncertainty and reduce the supply of a key raw material with no domestic equivalent that's needed by more than 100,000 American workers making kitchen cabinets in the U.S," according to the AAHP. "The federal government has tied one arm behind the backs of the U.S. cabinet makers and other manufacturing industries by denying them a level playing field in raw material sourcing with their offshore competitors," the AAHP charged, noting that U.S. manufacturers "depend on the availability of global resources." The AAHP has long refuted what it claims is "unfounded allegations" that importers of Chinese hardwood plywood are circumventing U.S. trade law in order to gain an unfair competitive advantage, claiming that hard- wood plywood made by China cannot be produced in the U.S., that the cab- inet industry uses Chinese plywood for distinctly different purposes than U.S. plywood, and that advocates of the duties "seek to profit by manipulat- ing markets and sowing panic." "Domestic and Chinese plywood both play a vital complementary role for American cabinet manufacturers and other end users" vying to remain com- petitive, said AAHP Chairman Greg Simon, charging that the newly imposed duties are "based purely on politics, not on any type of marketplace reality." The tariffs, Simon claimed, "are presented as cracking down on Chinese trade 'cheating' and protecting American jobs, [but] unfortunately, hun- dreds of thousands of American workers will pay the price in lost jobs. "The government should not be in the business of trying to pick winners and losers," Simon said. "In fact, in these trade cases, nobody wins." The AAHP, which labeled the duties as unwarranted, unfair and prejudicial, has claimed that imported hardwood plywood products from China are traded fairly at competitive prices and have a rightful place in the global consumer market. The AAHP has, in the past, been supported by the National Association of Home Builders and other trade associations at government hearings in defense of anti-dumping and countervailing duties, according to the AAHP, adding that it is also supported by a wide range of cabinet makers, laminators, retailers and others "who agree that Chinese and domestic hardwood plywood is fundamentally and physically different." 34 Kitchen & Bath Design News • November 2018 SPECIAL REPORT

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