July 2019 President's Letter
Tuesday, September 17, 2019
Posted by: Trish Moss
Tariffs help who?
As of this writing, it appears that in addition to tariffs already imposed on ceramic tile from China, an action filed with the U.S. International Trade Commission (USITC) alleging dumping and unfair trade practices is moving forward as well. The preliminary findings, scheduled to be available July 8th, have been delayed with a final determination to come perhaps early next year.
The anti-dumping/anti-subsidy investigation could have a much more significant price impact on Chinese tile than tariffs already in place. The anti-dumping action against quartz slab products brought increases as high as 280%+. If ceramic tile products follow that course, there significant realignment within the manufacturing, distributing and installation community regarding Chinese tile products is likely.
There will no doubt be price adjustments in the market. Some will feel as though they are suddenly unrestrained to impose unsupported price increases not related to materials cost or the costs of doing business, but instead to a presumed realignment of the political landscape.
The president of one of the biggest tile manufacturers in the U.S. once said, “The cost of installation labor is too high.” It makes me wonder, if the cost of labor is too high, is the cost of tile too high? If the subsidized tile coming from China kept tile prices low, did that unfairly set the price for tile? How is this different than a highly-qualified trade contractor competing with another installation contractor with a lesser amount of investment in their company’s training, reputation and probable longevity? It’s not that I am unsympathetic to the condition that brought the anti-dumping action; I just think it’s ironic that a possible remedy may be government intervention. This is contrary to my way of thinking.
Who is this good for? Certainly, there will be benefits on all sides (except perhaps the subsidized manufacturer). I do not want to engage in politics, at least not in TileLetter, nor do I claim to be a trade expert. Inexpensive tile from one country or another is not the installation contractor’s most pressing issue. The most challenging issue facing the tile installation community is finding and keeping quality staff and training new installation professionals who are interested in making a living in the trades. This is the most pressing issue we need to address, irrespective of the ultimate outcome of the tariffs and anti-dumping/anti subsidy actions.
I see some risk in limiting inexpensive tile products, either by tariffs or government restriction. Does it help the hard tile market as a category? There is a market and a customer for basic products and installations. Making this more costly may just be an invitation for qualified labor to lose even more projects to poor installers, or perhaps other categories like LVT. I am especially concerned that this will become an excuse to inflate tile pricing in all categories, if manufacturers think this eliminates the need to stay competitive. That will ultimately push more square footage to other surface finish products. There is no need to drive jobs away.
In the big picture, forward-thinking, high-quality manufacturers are seeing this as a long-term – not short burst – opportunity. It feels like they are marketing with a renewed vigor. This is great timing for tile manufacturers who are investing in new facilities or upgrading existing plants in the U.S. Please support the distributors and manufacturers who are investing in our industry and visibly supporting training, education and industry involvement. They are the engine we need to keep feeding. If the tariffs end up helping them, well, that may just be a good thing.
For more information on the USITC action, visit https://bit.ly/2VYSs1z or https://www.usitc.gov/press_room/news_release/2019/er0524ll1103.htm.
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