US President Trump said on September 23rd that he would impose a 15% tariff on $300 billion worth of goods on September 1st, instead of the 10% he had previously announced. In addition, the current 25% tariff on 250 billion Chinese goods will rise to 30% on October 1.
With tariffs imposed by China and the United States on the same day, the trade war escalated to an unprecedented height.
For flooring enterprises, tariff measures will have a huge impact on the flooring industry in the United States and China. Tariffs impose taxes on imported goods. Registered U.S. enterprises are required to pay U.S. Customs duties on their imports into the United States. Importers usually pass tariff costs on to their customers, American manufacturers and consumers, through price increases.
The high tariff of 30% makes American flooring enterprises suffer terribly, which greatly increases the import cost.American business executives and analysts say that American consumers will pay most of their taxes through rising prices.
Chinese floor suppliers do have to bear part of the cost of US tariff measures indirectly. For example, exporters are sometimes forced to offer discounts to U.S. importers to help offset the cost of increased U.S. tariffs. If American importers find a non-tariff source of the same goods outside China, Chinese flooring companies may lose their business.
In view of the current tariff issue and the rising labor costs in China, after more than a year of field visits, DECNO decided to invest overseas to set up a factory in Malacca, Malaysia, covering more than 200 acres. It is expected to be produced in June 2020. We call this DMIM plan.
Overseas investment in factories can effectively avoid tariff barriers. Flooring is normally exported to the United States. It also saves a lot of costs for American flooring enterprises. At the same time, it can also meet the needs of customers in Southeast Asia.
In the early stage, we set up production lines of SPC products, four production lines of extrusion equipment, two production lines of grooving line, one UV painting line, two production lines of floor mat. The color film and wear-resistant layer will be purchased from China. All the technicians will be assumed by China and controlled from raw materials, process and equipment to ensure the products produced. The quality is in line with the present export.
This should be exciting news for American flooring enterprises. Purchasing from Chinese flooring suppliers can be transferred to the Malaysian SPC factory of DECNO with no tax increase. American flooring customers are welcome to make layout as soon as possible and contact DECNO.