Our Business Development Manager Keisuke Tsuboi visited Atlanta to attend International Woodworking Fair (IWF) 2022 in late August. At IWF, global woodworking companies, from the furniture sector industry to the machinery industry, gather to see exhibitions of innovative products and technologies while networking with each other.

According to Tsuboi, the participants’ conversation revolved around the US retaliatory tariff on China as well as the devastating impact that some companies would face because of a new policy involving China-made imports from Vietnam.

Since 2018, the US has been imposing a 25% retaliatory tariff on some Chinese imports. To avoid such tariff compensation, many woodworking manufacturing companies have immediately redirected their import route for goods that they need.

The tactic of those companies was:
First, transport Chinese materials from China to Vietnam by working with companies in Vietnam.
Second, those Vietnamese companies create goods out of Chinese materials.
Third, import those goods from Vietnam to the U.S.

By following each step, some US companies have been able to continue to import goods that they need at a cheap price while avoiding the retaliatory tariff.

However, this tactic won’t work anymore.

The US Department of Commerce (DOC) has noticed a significant increase in the number of plywoods that use Vietnamese hardwood materials. After the investigation, DOC found out the following plywood manufacturing process done by some of the woodworking manufacturing companies:

First, transport Chinese peeled wood core from China to Vietnam.
Second, the Vietnamese companies create hardwood materials by gluing together layers of the Chinese peeled wood core.
Third, import hardwood materials from Vietnam to the U.S. to make plywood.

Eventually, DOC concluded that this process done by some US woodworking manufacturing companies would make the retaliatory tariff policy on China in vain since China could still benefit from the process.

Now DOC states that Vietnamese hardwood materials that use Chinese peel wood core come under 200% retaliatory tariff policy. This policy requires those US companies to pay the total amount of retaliatory tariff, from June 2020 to the present, that was supposed to be paid to the government if they directly imported hardwood materials from China.

Tsuboi is guessing that those companies would soon file a lawsuit against the government since the decision is unreasonable due to the insufficient description of what comes under the original 25% retaliatory tariff policy.

While this DOC statement is a huge matter to many global woodworking companies, there is another concern that they are facing, the post-covid housing market situation.

Tsuboi said it is essential to monitor a housing market right now since the market is most likely to be sluggish due to a spike in mortgage rates and housing prices. Moreover, people has turned their attention from home to outside as the covid cases declined. Fewer people are now investing in housing than during the pandemic.

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