The Quartz Tariff
The Trade War with China and the Quartz Tariff
Tariffs are taxes or duties on imports. Some people call a tariff a “trade barrier.” It makes goods coming in with a tariff less attractive since the tariff results in them costing more.
As you may have known, in recent months, the Trump administration has seen fit to impose tariffs on goods coming into the United States from China. This was supposed to produce leverage to achieve a more favorable trade. Instead, though, China has thus far responded to the Trump tariffs with tariffs on incoming US good, a situation often called a “trade war.” At the moment, it doesn’t look like it’s going to end any time in the immediate future. Rather, both countries are threatening to keep increasing tariffs on one another’s goods and services.
Interesting, one goal of tariffs, and of the current US trade policy in general, is to eliminate American trade deficits. Measured by this standard, the Donald Trump tariffs have yet to achieve notable success with the overall trade deficit for 2018 coming in at $891 billion. Trade with China has fallen off slightly, but imports from other countries like Mexico and China have increased. On balance, US domestic product hasn’t gained any ground, and Americans are still buying a lot more from China than they’re selling there. In the first quarter of 2019, the US had a trade deficit with China of $80 billion dollars.
You may suspect the Trump trade tariffs on China have affected the price of quartz coming in from that nation. If so, you’re correct.
The Quartz Tariff
The quartz tariff has escalated in stages along with the tariffs imposed on other Chinese goods and services. In fact, the current tariff on Chinese quartz is especially high because it is seen as an “anti-dumping” measure. This means that the Commerce Department views Chinese exporters as selling their quartz below market value, a practice made possible by subsidized production.
The punitive measures resulted from an unfair-trade petition filed by Cambria Company LLC, a manufacturer in Minnesota.
The tariffs vary somewhat depending on the specific Chinese company. The large company Foshan Yixin Stone Co. Ltd., for example, must contend with tariffs of 314.1% while some smaller firms must only deal with 242.1%. There are five levels of quartz tariff overall.
The Quartz Tariff: Critical Circumstances
One might assume that a logical response to dodging a tariff would be for the exporter to get the Chinese quartz into the US before the tariff takes effect, and that, failing that, at least the tariffs wouldn’t fall on quartz that was already inside the country. That’s not the case here, though, because Cambria asked for a consideration of “critical circumstances,” and the Commerce Department granted it.
In the case of quartz, this means that Chinese quartz that was in the US up to 90 days before the Federal Register published the new tariffs and is still unsold gets hit with the anti-dumping tariff, too. This can apply whether the quartz is sitting in a warehouse in a port of entry, a shipyard, or even already turned into countertops.
The Quartz Tariff and the Cost of Quartz in the US
While the anti-dumping tariff remains in effect, the final cost of Chinese quartz to importers will effectively quadruple. In other words, a piece of quartz with a customs value of just $500 could end up costing around $2240. How much this will affect the market for quartz countertops and to what extent fabricators will pass increased material costs on to purchasers remains to be seen.