Tariff Time for Tiles, Too

By Emerson Schwartzkopf

WASHINGTON – Ceramic-tile imports from China – including large-format slabs – could face additional tariffs for alleged unfair-trade actions.

The U.S. International Trade Commission (USITC) voted 5-0 on May 24 to continue investigations into antidumping and countervailing (subsidized) charges made in April by eight of the largest U.S. tile manufacturers.

The federal Commerce Department and its International Trade Administration (ITA) will determine any preliminary tariffs in mid-summer and early fall.

The case parallels the tariff procedure started in April 2018 by Cambria Company LLC against Chinese producers of quartz surfaces, where preliminary tariffs in excess of 300% went into effect.

With Chinese ceramic-tile imports, the USITC acted on an April 10 petition by the Coalition for Fair Trade in Ceramic Tile (CFTCT) seeking relief from unfair trade practices through tariffs. The group claimed that Chinese imports of ceramic tile made a substantial impact in the United States by selling at less than market value, and the Chinese industry received substantial government subsidies.

The industry group represents more than 90% of U.S. ceramic-tile production, according to a declaration filed by Eric Astrachan, executive director of the CFTCT and the Tile Council of North America (TCNA). The members are:

American Wonder Porcelain, Lebanon, Tenn.;
Crossville Inc., Crossville, Tenn.;
Dal-Tile Corp., Dallas:
Del Conca USA Inc., Loudon, Tenn.;
Florida Tile Inc., Lexington, Ky.;
Florim USA, Clarksville, Tenn;
Landmark Ceramics, Mount Pleasant, Tenn.; and
StonePeak Ceramics, Chicago.

The petition noted that average unit value (AUV) of Chinese ceramic imports remained flat in the past few years, from 2016’s 89¢ to last year’s 90¢. The CFTCT, however, claimed that further investigation “will reveal significant and pervasive underselling by subject imports.”

Evidence from the CFTCT also cited numerous government programs in China offering preferential loans, credits, tax reductions, grants and utilities/material discount provisions. The CFTCT also notes that the European Union, India, Mexico, Pakistan and South Korea all impose antidumping tariffs on some Chinese ceramic-tile products.

The petition covers “articles containing a mixture of minerals including clay (generally hydrous silicates of alumina or magnesium) that are treated to develop a fired bond,” and pertains “regardless of end use, size, thickness, and weight.”

The compliant also makes sure to include slab-sized tile sheets – “for the avoidance for doubt,” the petition notes, “subject merchandise includes tiles pressed as very large single pieces, o to and exceeding 5’ X 15’.”

The exact effects of the Chinese products on the U.S. market are unclear, however, as U.S. production data is mostly redacted from public versions of the petition and supporting documents. U.S. petitioners can claim confidential privileges on what they deem as proprietary information.

In testimony submitted to the USITC for a May 1 hearing, however, several members cited anecdotal information indicating that Chinese ceramic tile prices represented 40%-50% of their U.S. production costs.

Also, Dal-Tile Executive Vice President Gianni Mattioli noted the curtailment of approximately $100 million in investments in facilities in Dickson, Tenn., and El Paso, Texas, that would’ve added 160+ jobs. Tim Curran, co-president of The Curran Group that owns Crossville, said his company closed its weekend production and reduced workforce by 10%.  

“ln the 25 years since l joined the board of TCNA,and in my 18 years as a member of staff, never before have U.S. manufacturers spoken so regularly to me of lost sales to Chinese imports and prices with which they cannot compete,” noted the TCNA’s Astrachan. “We believe the situation is at a tipping point with sales and profits already declining. We desperately seek relief from this unfair trade.”

Opponents of the ceramic-tile tariff, including MSI, Arizona Tile, Home Depot and several Chinese producers, argued that several members of the CFTCT also import Chinese tile, and noted large displays of branded mosaic products made in China. They also questioned the coalition’s downplaying of the impact of luxury vinyl tile (LVT) as “miniscule,” citing LVT as a $3.1 billion industry. (The CFTCT responded after the hearing that “the carpet industry, not the ceramic tile industry, is suffering the greatest loss of market share to LVT.”)

A May 6 filing from Foshan, China-ased Guangdong Kito Ceramics Group Co. Ltd. also questioned the petition’s claim of material injury to U.S. manufacturers, noting that Chinese shipments are mainly mosaic and decorative wall tile, not floor tile. It also citied China’s worldwide ceramic-tile exports decreasing from 2016-2018, and quoted a Chinese trade-association estimate that the country’s production capacity declined by more than 12% since 2016.

The Commerce Department will continue investigations on the possible ceramic-tile tariffs, with preliminary determinations scheduled for July 8 (countervailing) and Sept. 18 (antidumping).

The ceramic-tile petition follows much the same track as the April 2018 action by U.S. manufacturer Cambria to seek unfair-trade tariffs against Chinese producers. Cambria successfully petitioned to get preliminary tariff amounts approved, with final action coming later this month.

Get the news of the industry with Slab & Sheet, the e-newsletter from Stone Update. Sign up for free delivery here.

For the latest industry info, check Stone Update on Twitter and Facebook.

Experience the totally new Stone Update Magazine online.