Chinese Tariffs – How to Minimize Impact on Flooring Costs

China Tariffs and flooring costs

Chinese tariffs have been a significant topic of conversation over the last few months, so I wanted to offer a few ways to mitigate the cost increases that stem from it.

Almost all building materials are affected, and flooring is no exception. It’s been particularly impactful in the LVT category often used in multi-family because that segment of the industry was completely dominated by Chinese products.

The original plan for the tariffs was a 10% increase on effective October 1st and a 15% bump on January 1st. However, that has changed.

Just a few weeks ago the US and China agreed to hold off on additional tariffs for 90 days, after the G20 summit. This means that the 15% increase won’t be in effect until March, creating a new window of time for decision making. Here are a few things to consider over the next few months to help you minimize your building costs.

south korea flag1. Other countries are now competing with Chinese pricing

South Korea in particular has been a strong player in resilient flooring for some time now. In many cases you’ll be able to source a higher quality product for the same cost as a post-tariff Chinese product.

2. Negotiate based on the facts, not the hype

Tariffs are applied at port. This means that while companies like ours have seen a cost increase, the sale price doesn’t have to increase by that same percentage. It’s not entirely truthful to blame a 25% year end price increase on Chinese tariffs.

3. Order material that has or will hit port before the next round of increases

shipping portSome manufacturers have inventory on hand now in large quantities to avoid higher costs early next year. If you can purchase early, you can take advantage of this.

4. Give it time to blow over

None of the tariffs are guaranteed or permanent. If you don’t need material within the next 9-12 months or so then you have time to see how the situation develops. If tariffs continue it’s likely that other sources will start producing entry level LVT at lower process to take market share from China. If tariffs do not continue, then we can all go back to business as usual.

Latest Updates/Further Reading:

  • https://www.bloomberg.com/news/articles/2018-12-18/china-takes-wto-step-in-dispute-over-trump-s-trade-tariffs
  • https://www.cnbc.com/2018/12/01/us-china-wont-impose-additional-tariffs-after-january-1-report.html
  • https://www.usatoday.com/story/money/2018/12/06/china-us-trade-pact/2223835002/

Let me know how I can be helpful to you in the new year.

Here’s to a profitable and productive 2019.

Many thanks,
Brandon

Brandon White
Director of Commercial Sales
South Cypress

Connect with me on LinkedIn HERE

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