Importers concerned, optimistic about new U.S. import duties

HIGH POINT — Importers reacted with a mixture of concern and optimism to new


preliminary, and in many cases potentially higher, U.S. import duties assigned to Chinese manufacturers of wood bedroom furniture.
The duties announced this week by the U.S. Department of Commerce are based on the preliminary results of a review of furniture imported from China between June 24, 2004, and Dec. 31, 2016.
Duties for five mandatory respondents — large manufacturers the DOC investigates individually — range from 1.24% for Shanghai Aosen to 74.69% for Starcorp Furniture Co. Fine Furniture received a rate of 2.13%, Foshan Guanqui Furniture Co. got 13.26% and Dare Group received 58.84%.
Final duty rates won’t be determined until June at the earliest. A delay could postpone that until August.
However, some importers already are eager to challenge the preliminary rates that are unfavorable for their sourcing partners.
Tom Underhill, co-president of case goods importer Tradewins, which sources exclusively from Starcrop, said the manufacturer’s rate should be revised downward. He believes that the new rate — which rose from an original 15.78% — is based on data that make it look like Starcorp was shipping more furniture than it actually was.  
Tradewins’ legal counsel, Steptoe & Johnson, will meet with the DOC in March to discuss the matter.
Dare Group’s original rate was 6.65%, according to attorneys representing the group of petitioners that sought the original antidumping investigation, which alleged that Chinese manufacturers were selling product into the U.S. market below cost.
Among the group’s key U.S. customers are Kemp Enterprises and Manchester Furniture Group. Kemp officials were not available for comment.
However, American Furniture Warehouse CEO Jake Jabs said he receives three bedroom groups from Kemp that are sourced from Dare. He said that if the duty rate remains at that level, he could lose those well-performing groups.
“Obviously, nobody can pay a 58.84% duty,” he said. “People don’t realize the consequences of this. It could run Dare out of business.”
He also criticized the review process, which he believes penalizes Chinese companies for not having the legal or administrative muscle to fill out complex paperwork required in the process.
“The trouble with things like this is that they are discriminatory, they are not fair,” he said. “One company may have better attorneys and better bookkeepers and another is not as sophisticated in filling out the right forms for the American people who want all this information.”
Manchester officials said they believe there have been some errors in the calculations and that Dare will appeal the preliminary results. The issue is important to the company because is looking to complete a joint venture agreement with Dare in the near future. In 2016, it sourced about half its bedroom from Dare, up from 10% in 2016.
“Obviously, we disagree with the margin calculated for the Dare Group completely,” said Jeffrey Grimson, an attorney with Washington-based Kaye Scholer LLP, which represents Manchester. “The DOC ignored or misunderstood much information that Dare Group provided. We are optimistic that the final results for Dare Group will be much lower.”
The review also identified another 38 companies that received a 62.94% duty. Most of those companies are said to originally have had a 198.08% duty rate, but at least two originally had the amended Section A rate of 7.24%. That rate was amended last November after Lacquer Craft Mfg. had its duty eliminated.
Joe Elmore, Master Design executive vice president of marketing, sales and product development, said his company doesn’t source bedroom from any of those factories. He said his company will continue to do business with sources in the single-digit duty range. But he said the higher rate also encourages him to keep any eye out for sources outside of China.
“It does motivate us to continue our factory exploration outside the China region,” he said, noting the company now deals with 10 factories in Malaysia, six in Vietnam and two in Brazil. “As long as bedroom has this potential for volatility, we will go where we need to go to remain effective and competitive in the marketplace.”
He added that the company also plans to continue sourcing dining room and occasional from China.
Ron O’Dell, president of case goods importer Trade Masters, also said he isn’t doing any bedroom business in any of the 38 factories with the 62.9% rate.
The news coincides with the launch of the second administrative review. So far, the petitioners have requested that 180 Chinese manufacturers be subjected to this review, which covers products imported in 2016.
O’Dell said that all of his Chinese bedroom suppliers — five or six in total — are on that list. But he was confident they will come through the review without a significantly higher rate.
“My thoughts are that we will go through the same process we did for the first administrative review, which came out OK with the factories we do business with,” he said. “We expect there will be a process we can go through for the second administrative review and have the same outcome.”
Today, he sources all his bedroom from China. As he has in the past, he will continue to look for other bedroom sources outside China. However, he has no plans to do so immediately.
“With the duty rate being what it is today, I still feel the best quality, packaging, production capacity and value of the product for the cost is coming out of China, even at 7.24%,” he said.
Doug Franklin, vice president of sales for case goods importer Vineyard Furniture International, said he also doesn’t expect the second administrative review to yield any major changes, particularly in the Section A duty rates.
He also said that there are enough factories in China with lower duties that would be open for business should a need arise to shift sourcing.
“Before we would arbitrarily say we can’t do business in China, we would go to a different facility than a different country,” he said.
The preliminary results for the second administrative review are expected sometime in January 2018, if not sooner. The final results will be available 120 to 180 days from then.
Editor in Chief Ray Allegrezza and Staff Writer Heath Combs contributed to this report.