“The president is 100 percent correct,” Cambria CEO Marty Davis told the Business Journal, adding, “We’re fortunate he has the courage and intelligence to see this for what it is.”
Belle Plaine-based Cambria is the largest U.S. producer of quartz countertops, backsplashes, and floor tiles.
Cambria has led efforts to persuade the U.S. Commerce Department and the International Trade Commission to counteract what the company’s CEO says is a Chinese strategy to force American companies out of business by dumping—flooding the market with cut-price imports.
“They sell their product into America at a price lower than our raw material costs,” Davis told the Business Journal.
Davis has long praised tariffs as an effective way to fight back against what he says is a Chinese gambit to “hijack the prosperity of America” with imports that are subsidized by China’s communist regime.
“The employment we lost during this period of time, as China started pouring in with subsidized product and we slowed down in our production, we lost 200 people in Minnesota,” Davis told WCCO.
The CEO added that what he calls state-sponsored dumping by China also put a stranglehold on his company’s expansion plans that would have created 300 jobs.
Davis calls tariffs a “trade-enforcement tool” and “the only weaponry we have in this economic world war.”
“We are very grateful to the administration; my support of Trump on this particular issue is policy-oriented. Ultimately we would have lost a lot more and it would have decimated our industry,” Davis told WCCO.
Trade Commission Rules In Favor of Cambria
Cambria, which employs about 2000 people, filed a complaint last year that China was dumping quartz and hurting its business.
At the time, Davis argued China not only subsidized its quartz exports to allow them to flood foreign markets at prices below the cost of production but also hit quartz imports into China with a 40 percent protectionist tariff.
According to Cambria’s estimates cited by the Star Tribune, China’s quartz exports to the United States displaced up to $1.5 billion of U.S. quartz sales last year, up from $1.2 billion in 2017.
“We’ve had to tighten different areas of our business,” Davis told the Business Journal, adding that his company’s sales “have flattened.”
Investigations by the Commerce Department and the International Trade Commission started in May of last year, leading to several preliminary rulings.
In Nov. 2018, the Commerce Department concluded that “certain quartz surface products from the People’s Republic of China are being, or are likely to be, sold in the United States at less than fair value.”
In May 2019, Commerce issued a “Final Affirmative Determination of Sales at Less Than Fair Value” and ruled to impose a range of duties ranging up to 178 percent for unfair subsidies and up to 341 percent for dumping.
“Commerce’s recent announcement is an important step toward restoring a level playing field in our industry,” Davis told the Star Tribunal last November.
The final step before the duties could be enacted, however, was a decision by the International Trade Commission (ITC).
On Wednesday, June 12, the ITC ruled unanimously to uphold the Commerce decision.
“With today’s decision, the ITC is affirming that foreign governments and producers who break the laws of international trade will be held accountable,” Davis told the Atlanta Journal-Constitution.`
The newly affirmed duties are over and above the broader Trump administration tariffs of up to 25 percent on about $200 billion of Chinese imports.
Some industry bodies oppose the ITC decision to impose higher tariffs on quartz, arguing that tens of thousands of American jobs depend on the availability of cheap imported quartz.
“At the end of the day, Cambria’s litigious behavior means higher prices and limited choice for American consumers,” reads a statement from the American Quartz Worker Coalition, which covers about 400 businesses that fabricate consumer items like countertops out of quartz.
“The U.S. quartz industry is an American success story,” said Matt Huarte, Owner and Vice President of Arizona Tile, in a press release announcing the formation of the Coalition. “The industry has generated significant job growth, healthy profits and exploding sales over the past decade. Unfortunately, this success story is threatened by Cambria’s trade petition, which is simply an attempt to fatten its already high profits to the detriment of other manufacturers in the U.S. quartz industry, as well as U.S. quartz consumers. If the costs of quartz increase, consumers will choose alternative countertops, reducing U.S. fabricating-related jobs.”
“There are two very distinct market segments for quartz countertops and ‘looks’ in the U.S.—the luxury market and the mass market—with little competition between them,” said Rupesh Shah, Co-President of MS International. “Cambria already dominates the premium luxury market with high-priced specialty products and is highly profitable as a result. U.S. fabricators, who serve the mass market and account for over 50,000 manufacturing jobs throughout all 50 states, rely on these imports to provide consumers with affordable quartz countertop products. If these duties are imposed, U.S. fabricators across the country will suffer.”
But Davis argues that adjustments to quartz distribution channels will eventually offset higher quartz prices caused by the new tariffs.
“There may be an adjustment to consumer prices, but that’s all got to play out,” Davis told the Business Journal.
Already some supply chain adjustments have taken place, with many importers picking up the slack with imports from Turkey and India.