Noah Bell, HR Assistant
The most disruptive force in American commerce and manufacturing is China. The massive manufacturing empire has been stealing intellectual property, subsidizing its industries, and inflating its own economy to increase foreign purchasing power.
One important industry was completely wiped out by China’s trade strategies. During the mid 90’s to early 2000’s, an assault on the American furniture industry took place. In sequence, the doors of American furniture makers closed. Even a company like Richardson Bros., which had been in business for 120 years, closed its operations and began importing products (Richardson, May 2002). They are now permanently closed. Several members of the furniture industry, like Mark Wexler of Master Woodcraft Cabinetry, side-stepped into the cabinet industry only to find China launched an assault there, too.
What do Chinese companies do to close-down the operations of American ones? Are the products better engineered or of a higher quality? As a long-time top competitor in the cabinet industry, here at MHD we know that not to be the case.
Chinese cabinets and other wooden products arrive at their destination for half the price of an American equivalent. This is a result of “dumping.” Chinese cabinets are sold for no profit and the government then subsidizes the industry. They have minimal overhead costs due to low safety requirements. Unlike American companies, Chinese manufacturers have little regard for the environment. Despite new regulations regarding environmental concerns, the rules are not strictly enforced.
Because of such unfair practices and bare-bones regulation, which harm not only America’s economy but the world’s, the US fought back. It did not fight back by engaging in the same crony tactics, but by placing a 10% tariff on $200 billion worth of Chinese imports (USTR, September 2018).
These tariffs were put into effect in September of 2018. This past May, the Executive branch felt China had reneged on its trade promises and hiked the tariffs to 25% on $250 billion of Chinese imports (Congressional Research Service, June 2019).
Unfortunately, even with new tariffs, Chinese kitchen cabinet products are still sold well under value because of dumping. The Department of Commerce and International Trade Commission are both investigating the dumping. According to a Forbes article, they have calculated an estimated 216% margin on Chinese cabinet products (Rapoza, March 2019).
To counterbalance the dumping margins, the American Kitchen Cabinet Alliance has filed suit and is requesting over 200% in tariffs on Chinese cabinets, including materials and RTAs (ready to assemble cabinets). China often ships cabinets in parts for assembly or even in multiple shipments to avoid tariffs. This doesn’t just hurt manufacturers but turns companies into hollow assemblers.
What does this all mean? We can expect more American jobs and higher quality apartment and residential living.
New developments on the China trade tariffs and their impact will be covered here!