American Cabinets Strike Back

 

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!

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