On The Rocks

Chinese Tariffs on Quartz Surfaces Take Effect

As you probably of already heard, tariffs on Chinese Quartz products are now in full effect. However, these tariffs are not the direct result of President Trump’s “trade wars” that are all over the news of late and that are also having a significant impact on various aspects of our economy.

The tariffs on Chinese quartz products, specifically, are the result of an unfair-trade petition that was filed by Minnesota-based manufacturer Cambria Company LLC earlier this year, against Chinese Quartz suppliers and fabricators in an anti-dumping action.

Cambria was for many years the exclusive producer in the US for quartz that was made using the Italian Breton technology. This technology is now also employed by many Chinese companies who have made significant investments in Quartz Production to improve quality and meet the increased demand, particularly in the US.

The petition filed by Cambria asked the U.S. International Trade Commission (USITC), for relief against Chinese manufacturers of quartz, accusing them of “dumping” and/or being subsidized by the Chinese government.

Scope/Definintion of products included in the petition:

Quartz surface products consist of SLABS and other surfaces created from a mixture of materials that includes silica predominately (e.g., quartz, quartz powder, cristobalite) as well as a resin binder (e.g., an unsaturated polyester). The incorporation of other materials, including, but not limited to, pigments, cement, or other additives does not remove the merchandise from the scope of the investigations.

IN ADDITION to slabs, the scope may include, but is not limited to, other surfaces such as countertops, backsplashes, vanity tops, bar tops, worktops, tabletops, flooring, wall facing, shower surrounds, fireplace surrounds, mantels, and tiles. Quartz surface products are covered whether or not polished, cut, fabricated, cured, edged, finished, thermal-formed, packaged, and regardless of the type of surface finish.

The Results (what’s happening now):

Tariffs now in effect can add 242.1% to 314.1% to the cost of importing Chinese quartz surfaces into the United States. This is in addition to the first punitive actions taken in September in response to the Cambria Petition that set an effective 34% tariff for most Chinese quartz surfaces on countervailing (subsidized value) practices.

Again, these antidumping/countervailing tariffs are separate from the blanket Trump administration (also known as the Section 301) tariffs on a wide variety of Chinese goods. An initial 10% tariff went into effect earlier in the fall, set to increase to 25% January 1, 2019 if there’s no substantial trade deal between China and the United States agreed to in the near future.

Response by Importers/Distributors:

In the short term, significant price increases across the board on Quartz Products for the near term for QuartzMaster and most of our competitors.

In the Longer term sourcing solutions to reduce dependence on Chinese Quartz are being pursued but will take time to implement.

In our view, beyond the geopolitical tactics employed by the US and China, and failing a resolution agreement made between our two countries in the near term, we expect that the Chinese Exporting companies themselves, will aggressively take measures to counter the impact of these tariffs and bring prices down. We know that in recent years, Chinese manufacturers have made huge multi million dollar investments in production technologies (Breton) specifically for Quartz Surfaces. Expecting that these investments will be abandoned and factories idled for the longer term is unlikely in our opinion. In a larger sense the US market is just too big of an opportunity to be ignored.

READ MORE – Stone Update article summarizes the situation well:

CNBC also noted broad increases in construction costs as tariffs are put in place on a wide range of building products. You can read the full article here:

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