The U.S. Commerce Department implemented a significant increase on antidumping rates for Chinese engineered wood flooring imports this week, a jump industry leaders say could signal the end of an era for Chinese hardwood flooring in the U.S.
The antidumping duty margins ballooned to 85.13% as a countrywide rate for 46 Chinese companies, and a separate rate increase of 42.57% for 59 specific companies, according to the Decorative Hardwoods Association. The rate hike is effective immediately after being published in the Federal Register and transmitted to the U.S. Customs and Border Protection. It includes retroactive duties for Chinese imports by the affected companies starting from Dec. 31, 2016. The duty increase is in addition to 25% U.S. tariffs on Chinese wood flooring already in effect.
“I think a lot of people are freaking out,” said Danny Harrington, VP of marketing and product development for Galleher LLC (Santa Fe Springs, Calif.), which he says would be marginally affected by the antidumping rate increase compared with other companies. “I know that there are a lot of companies, some of them of a fairly significant size, that will be immediately bankrupted if they actually have to pay this duty.”
Harrington calls the dramatic increase historically “unheard of,” as it took a punitive rate for one company and included it in the average rate for other mandatory respondents, a decision he says is out of the norm.
“Nobody thought that this mistake would survive in the final [rate], and it did,” Harrington said. “So I’m sure that there are numerous, furious appeals being filed right now, and this will be appealed.”
Brian Carson, president and CEO of AHF Products (West Hempfield Township, Pa.), which will not be impacted by the antidumping duty surge, called the rate increase “enormously disruptive” to the industry.
“Our estimates are about two-thirds of all the imports for wood that come in from China are affected by this,” Carson said, “which is an enormous amount.”
Carson said the rate is creating uncertainty in both pricing and supply in the industry.
“There’s a lot of business that you sold two years ago that, when you add the duty you’re going to pay today, you lost money on that business that you weren’t anticipating,” Carson said. “So it’s really created an impossible circumstance to run your businesses with any kind of certainty.”
AHF Products has manufacturing locations throughout the U.S. and in Cambodia, countries Carson believes will see a rush of customers seeking duty-free and tariff-free wood flooring products.
Overseas wood flooring production has already been shifting toward Southeast Asian countries since tariff tensions between the U.S. and China began boiling more than a year ago. The significant antidumping rate hike could be the final push out of China for U.S. wood flooring importers, according to Harrington.
“A rate this high, you just wouldn’t see Chinese product being imported anymore; it’s too high,” Harrington said. “The Chinese are very competitive, but they’re not that competitive.”
