Cali’s vinyl exemption a win for the industry

Home Inside FCNews Cali's vinyl exemption a win for the industry

Nov. 25/Dec. 2, 2019: Volume 35, Issue 11

By Ken Ryan

 

Cali CEO Doug Jackson said the company’s associates got the ball rolling by writing letters to their local congressman.

The U.S. Trade Representative’s (USTR) decision to grant Cali Bamboo’s exclusion from 25% tariffs on LVT-related products employing a click system could potentially save the U.S. flooring industry hundreds of millions of dollars, according to some estimates.

“We’re delighted our efforts paid off,” Doug Jackson, CEO of Cali Bamboo, told FCNews. “This is good news for our industry, but namely good news for the customer who will maintain access to a high-quality product at a viable price.”

Jackson estimates that “well over 50%” of the LVT family of products are covered by this tariff exclusion. Note: Loose lay and glue-down LVT are not covered. The vinyl tariff exclusions apply until Aug. 7, 2020; at that point Cali would reapply. The company said it anticipates a similar outcome—unless the trade situation changes before then.

The exclusion concerns Section 301 tariffs for select types of luxury vinyl plank flooring. According to Cali, the products granted exclusions include:

•Floor coverings of polyvinyl chloride, presented in the form of tiles or planks designed to snap together during installation (described in statistical reporting as number 3918.10.1000).

•Vinyl floor tiles of polymers of vinyl chloride, designed to click together during installation, each measuring 4.7mm or more but not over 8mm in thickness, 18cm or more but not over 23cm in width and 120cm or more but not over 182cm in length (described in statistical reporting number 3918.10.1000).

•Vinyl floor tiles of polymers of vinyl chloride, designed to click together during installation, measuring 7mm in thickness, 18cm or more but not over 19cm in width and 120cm or more but not over 125cm in length (described in statistical reporting number 3918.10.1000).

Additionally, Cali was granted exclusions for:

•Standard wood moldings made of oak (described in statistical reporting number 4409.29.4100).

•Engineered flooring (oak) consisting of a 1.2mm thick oak veneer top layer, 5.8mm stone-plastic composite core and a 2mm polyethylene backing, such as flooring coated with aluminum oxide, measuring not over 191cm long by 19cm wide by 0.9cm thick (described in statistical reporting number 4412.99.5105). This includes Cali’s Geowood oak flooring.

Cali achieved the exemption through a grass-roots effort and collaboration with its local U.S. representative. Jackson said his company approached the congressman in June and together appealed to U.S. Trade Rep. Robert Lighthizer.

That Cali was successful when other, more established flooring companies were not is a testament to the diligent work on the part of Cali’s team, which took part in a letter-writing campaign, addressing its concerns to Scott Peters, U.S. Rep. for California’s 52nd congressional district. “The lion’s share of our associates all wrote letters,” Jackson recalled. “We got in front of the right people.”

Rep. Peters took up Cali’s cause, and with assistance from The Ridge Policy Group, a top government relations firm in Washington, D.C., ultimately got in front of the USTR’s Lighthizer. “[Rep. Peters] got a significant number of emails from Cali, and he pushed it forward,” Jackson said. “I have to give him a lot of credit, as he is the one who carried our torch.”

An unintended consequence of Cali’s exemption is that it covered the entire industry for click LVT—not just its products. “We were under the impression it was company specific,” he said. “When we learned the code was industry specific, we were elated.”

Industry reaction
Flooring leaders mostly hailed the USTR decision to rescind the tariff on certain click LVT products but note that confusion still lingers. “As an industry we need stability and clarity,” said Thomas Baert, president of FirmFit and CFL Flooring. “The exemption is good news, but it still creates uncertainty regarding what happens after August 2020.”

Tim Baucom, president of Shaw Floors, said the Shaw team has worked diligently to understand exactly what this exemption means and how the exclusions will be executed. “While there are still some unknowns that we are working through, we notified our customers on Nov. 15, 2019, that we will remove the tariff-related adjustments from their pricing.”

Flooring dealers, some of whom have benefited by the tariff hikes, nevertheless are seeking a resolution to this ongoing trade tiff. “Hopefully this temporary relief on our wholesale cost will stick as part of the trade deal the U.S. and China are working toward,” said Craig Phillips, president of Akron, Ohio-based Carpet Country and Barrington Carpet & Flooring Design. “Most of our vinyl products are positively affected by this exemption. We have seen actual price decreases from [one of our suppliers] already.”

A public docket that lists all the granted, denied and pending requests for this particular tariff can be seen online at exclusions.ustr.gov/s/docket?docketNumber=USTR-2019-0005.

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