Amidst the trade war with China, President Trump has increased tariffs on everyday Chinese goods. On September 17, 2018 The White House announced its 10% tariff on $200 billion of Chinese goods beginning September 24, 2018 with intent to increase to 25% at the end of the year. This 10% increase in tariffs includes floor covering categories from hardwood flooring to luxury vinyl. It is estimated around 50% of the flooring sold in the United States each year is manufactured in China.
Needless to say, this represents a dramatic shift in the flooring market as we know it and will an indirect effect on industries such as construction and real estate. Here is what Mohawk Industries the world’s largest floorcovering manufacturer headed by Chattanooga billionaire Jeff Lorberbaum has to say:
"Imposing 25 percent additional duties on these Chinese products will impact approximately $3 billion of Chinese exports and contribute to the Trump Administration's efforts to eliminate China's policies and practices that unfairly benefit Chinese manufacturers and exports," Mohawk says in its appeal for Chinese import duties. "Imposition of additional duties on these products will not harm U.S. consumers because there are sufficient alternative U.S. and other non-Chinese sources to meet the U.S. demand."
While there are many great alternatives to Chinese imported flooring, an increase in cost on half of the flooring market will definitely have a lasting effect on the flooring market as a whole. Here is what Dossche, founder of USFloors/COREtec has to say:
“We have no choice but to pass on this tariff through a price hike. We do not believe tariffs are the right tool to achieve this objective. Our industry and retail partners are enjoying a strong year of growth and profitability after the doom years of the Great Recession thanks to the exponential growth of rigid LVT, all initiated by the introduction of COREtec into the market in 2013.”
This gives domestic and other non-Chinese floor covering manufactures a distinctive advantage but only time will tell if the alternative sources of manufacturing capabilities are stable enough to meet growing demands at home. As of December 1, 2018, Chinese President Xi and President Trump have reached an agreement to hold off on adding the additional 25% tariff on each other’s goods going into January 1st. Both parties agreed to continue to negotiate lingering disagreements within the next 90 days and reevaluate the pending 25% tariff. This allows the flooring industry some breathing room as major US-based flooring brands continue to seek out alternative manufacturers outside of China while bracing for the largest tariff increase we have ever seen.