Unlike previous tariff notifications that barely caused flooring distributors to flinch, the Oct. 14 expiration of exemptions on imported engineered wood and laminate flooring has wholesalers on heightened alert for swift price increases.
The expiration means these products will be subject to so-called “reciprocal tariffs” that can be as high as 20% depending on country of origin. The change is part of a broader set of new tariffs on wood products justified under Section 232 of the Trade Expansion Act that followed an investigation by the U.S. Commerce Department that found imports of wood products threatened national security by undermining domestic manufacturing capacity and economic stability.
Immediate price impact expected
With a substantial percentage of both engineered hardwood and laminate coming from countries impacted by the most recent tariffs—and lack of any “on the water” exemption—executives say they expect the industry to face an immediate price increase on imported wood and laminate flooring.
FCNews spoke to several distributors—some of which rank among the top 20. “Tariffs seem to be the favorite diplomatic mechanism of our current administration,” said AJ Warne, vice president of sales and marketing, Abraham Linc, Bridgeport, W.Va. “As businesses, we must be prepared to react to or endure variable conditions when these changes are immediately implemented—such as the most recent changes made in wood and wood derivative products. We have favored a ‘prepare for the worst’ approach, spending a lot of time, money and energy being prepared for a whole range of potential directional shifts in our import strategy and to this point this strategy has served us well, enabling us to serve our customers well.”
Industry response and adaptation
The tariff announcement caught some wholesalers off guard, in part due to the fits-and-starts nature of Trump’s tariffs coupled with a spate of major news headlines (government shutdown, ICE enforcement activities, for example) that have relegated tariff talk to the back burner.
“Because these tariffs are less in the national spotlight, the industry has to do more of the heavy lifting to communicate about them,” said Scott Rozmus, president/CEO of top 20 distributor FlorStar Sales, Romeoville, Ill. “This time around, all the usual tariff rules apply—including the tariffs’ immediate impact on anything that has not yet cleared customs in port. In contrast, the spring tariffs had a delayed impact due to the government implementing an ‘on-the-water’ exception that exempted many in-transit orders from the tariffs’ impact. This time prices are going to start going up very quickly; we’ve already received increases from all of our impacted vendors and those increases are live as far as affecting the landed cost of goods.”
Uncertainty challenges planning
As with others, Jaeckle Distributing, Madison, Wis., is responding to the tariff issues promptly and as necessary, for example, modifying price to account for any changes. “We haven’t received many increases from our suppliers related to these recent developments yet, but we are expecting it is only a matter of time,” said Torrey Jaeckle, vice president of pricing and procurement.
“However, if this year has taught us anything, it is that things can change on a moment’s notice and it’s hard to plan and know what to expect. Fortunately, on Nov. 5, the Supreme Court is taking up the case regarding whether the IEEPA (International Emergency Economic Powers Act) gives the President the legal authority to impose tariffs. It will still take some time to receive a final ruling, but the fact that this case has been fast-tracked is good news. No matter where one stands on the issue of tariffs, I think we can all agree that anything that adds more long-term certainty and clarity to the situation will be a positive development. Business hates uncertainty and uncertainty makes planning difficult and can stave off investment, especially in inventory. And that lack of investment is bad for consumers, retailers and the supply chain.”
Distributors weigh strategies
For its part, Carrollton, Texas-based Adleta plans to raise prices accordingly depending on the country of origin, according to David Whitehurst, executive vice president. “Our plan is to initiate a price increase on wood and laminate to account for the immediate increase cost,” he explained. “We do have some inventory at pre-tariff pricing so we can hold for a short time.”
Big D Supply in Phoenix will continue to do what it does best, which is offer a wide variety of flooring options, at different price points, that provide homeowners and contractors flexibility to choose alternatives that fit their budgets and project needs. “The reality is we don’t have a better crystal ball than anyone else,” said Steve Kleinhans, president. “Until the tariff issues are resolved, our strategy will be to keep a close eye on the ever-changing landscape we are attempting to navigate by utilizing a diverse group of suppliers from various locations.”
Market outlook and long-term effects
Jeff Striegel, president of Elias Wilf, Owings Mills, Md., said there are some takeaways from the latest tariff move that are worth noting. U.S. manufacturer-based products, for example, will not be impacted by tariffs. Neither will Canada or Mexico, which falls under the USMCA (United States-Mexico-Canada) agreement. “While most countries throughout Asia are currently at a 20% tariff rate, there are several negotiated deals in place such as with the U.K. at 10% and Japan and South Korea at 15%,” Striegel said. “The China tariff continues to fluctuate and while it has been around 50%, it is now under special penalties and can be as high as 145%. All other imports will be tariffed at the current reciprocal tariff being applied on country of origin.”
Interestingly, while some distributors note that the continued uncertainty regarding tariffs has made for difficult business planning decisions, there are those that welcome the higher prices. “Whether tariff-based or not, the increased prices are needed in our industry,” said Aaron Rhoderick, vice president of sales, Tri-West Ltd., Santa Fe Springs, Calif. “We have not had notable increases over the past few years and the cost of doing business has continued to rise. We are all due for price increases—as long as the market can bear them on so many products all at once. In these difficult times, it is all about taking market share and taking advantage of disruption in the marketplace.”
