The trade war between the United States and China has been dragging out since 2018. While there may be a debate on why the trade war started, an undeniable fact is that before its implementation, there was a significant trade imbalance. This trade imbalance was largely due to the import of goods from China and has been building for some time now. It has affected nearly every industry in the US. This is why the tariffs cover so many different products and industries. Here’s how the US-China trade war has begun to affect natural stone costs.
Trade War Tariffs and Anti-Dumping Duties
Natural stones including granite, marble, travertine, and quartz have all been hit with tariffs thanks to the US-China trade war. The 25% tariffs have drastically reduced imports. The ‘Phase 1’ trade deal spared the industry the increase to 30%, but the industry has already begun to feel the impact. In July, China imported substantially less worked granite (-15%), worked marble (-33%), travertine (-70%), and other calcareous stone (-21%) than the previous year.
Quartz was hit especially hard, given that anti-dumping duties are being applied, in addition to the trade war tariffs. Combined, this means Chinese quartz is looking at combined tariffs and duties ranging from 311% to over 500%. The loop-hole to get quartz imported without these anti-dumping duties closed, making July the first month that these duties were applied. As a result, imports of quartz from China were negligible compared to the previous year (-99.8%).
The Impact on Natural Stone Costs in the US
The drop in natural stone imports from China has had resulted in less supply being available. This drop in supply has been offset somewhat by increased imports from other countries like India, Turkey, and Vietnam. However, the fundamental concept of economics is that when there is less supply and growing demand, prices will go up.
The Fluctuating Cost Based on Imports
Prior to the early 2000s, natural stone countertops were considered niche and exclusive. This was largely due to a limited number of imports. However, in the early 2000s countries like Brazil and China began importing granite, essentially flooding the market. This brought the cost down significantly, making it affordable for the everyday buyer. This happened at the same time as the housing bubble, causing the demand for granite to skyrocket, driving prices down. However, as imports begin to decrease again as a result of the tariffs and duties, the price is being driven back up.
With the tariffs and duties from the US-China trade war, imports from China now have a higher price tag, making them competitive with natural stone sourced domestically. Additionally, domestic suppliers have also increased prices to match the demand for their products.
With many vendors raising prices to accommodate the tariffs and imbalance between supply and demand, many natural stone retailers simply cannot afford to accommodate the higher cost of product. This has resulted in smaller companies either passing these higher costs on to their consumers or finding other ways to reduce costs (such as removing bonuses, layoffs, etc.).
All Popular Natural Stones Are Affected
The impact of these tariffs and duties has been felt by all of the popular natural stones used for countertops. For the last decade, granite has been one of the most popular natural stones used for countertops. This popularity means it is one of the hardest hit by the US-China trade war. Granite is already priced at $35-$100 per square foot installed, according to this guide, depending upon the variety of granite. However, this is expected to rise to over $200 per square foot installed by the end of 2020. In fact, big-box home improvement stores have already begun to charge up to 20% more for granite slabs and tiles.
Granite and quartz aren’t the only stones hit by the trade war. Marble, which costs $40-$100 per square foot installed, and limestone, which costs $70-$200 per square foot installed are both expected to increase substantially by the end of 2020 as well. These increases are due to a combination of tariffs, import duties, and depletion of existing inventory.
What the Future Holds
The ‘Phase 1’ trade deal has done little to alleviate the effects of the trade-war on natural stone prices. In fact, there’s speculation that the high prices are likely to continue, even if a trade agreement is reached. This is because the whole point of the trade war is to help level the playing field for American companies. Letting in cheap imports would be counter-intuitive.
While the increased prices of natural stone may be attributed to the tariffs of the US-China trade war, it’s important to keep an eye on tariffs targeted towards other countries as well. For example, tariffs on natural stone, excluding marble and other calcareous stone, coming from the EU were recently proposed (although not implemented as of this time). As trade imbalances become the center of attention, we will likely continue seeing tariffs and duties of one form or another that may just make these higher prices the new norm for natural stone countertops.
