On 1st September 2020, the new tariffs on flooring imports from China to the United States came into effect.
We are now seeing a significant increase in the cost of products and raw materials being imported to the U.S. from China, with the tariff rising from 10% to 25% for hard flooring materials.
While the long term effects of increased prices are still unknown, some of the issues that we are currently experiencing in the flooring industry are discussed below.
Higher prices for the customer
Due to the increased costs of raw flooring materials, higher prices are being passed on to the end customer. Commercial flooring contractors have no choice but to pass on the increased costs caused by tariff price increases in order to remain viable. This increase in overall project cost is having an impact on demand and the scope of projects.
It is likely that tariffs will result in fewer imports and fewer products to choose from. This is one of the major concerns raised by a group of flooring importers who have banded together to oppose the new taxes.
Products like luxury vinyl tile (LVT) which is almost exclusively made in China and shipped to the U.S. will be adversely affected, for example. Production of LVT in the United States is not currently anywhere near the level to support demand or offer a wide range of product choices.
The tariff increase comes into effect during a global pandemic where the industry has already faced shutdowns and less customer demand. Increased prices for raw materials and overall project budgets will likely reduce demand further as companies in many sectors are cautious about investing at this time of economic uncertainty.
The main question is will the tariffs remain in place over the long term? With China’s president Xi Jinping not backing down on actions to impose tariffs on U.S. goods, a mutual agreement could eventually be reached to put an end to a trade war.