By Guy Lawson
Nov. 28, 2018
“Sam Cobb was surprised to see so many people lined up for a hearing at the International Trade Commission in Washington on the morning of Monday, Aug. 20. The chief executive of Real Wood Floors, Cobb was a veteran of such proceedings, which were usually sleepy affairs, populated by white-shoe attorneys fighting over arcane legal definitions. For this hearing, though, the line stretched out the door and onto the sidewalk along E Street, where the people waiting to get in were surrounded by a scrum of television cameramen. In the preceding weeks, the Trump administration had floated a proposal to place punitive import tariffs on $200 billion of Chinese goods, and the politics of global trade had suddenly burst into the headlines.
In the packed hearing room, Cobb listened as dozens of witnesses detailed how tariffs on Chinese-made bicycles and tires and fruit juice — and the reciprocal taxes that would inevitably be imposed on American exports to China in response — would lead to higher prices and lost jobs in the United States. This was part of a series of public hearings to address a proposed Section 301 tariff list, named after the provision of the Trade Act of 1974 that permits the United States to impose tariffs on other nations in response to unfair trade practices — in this case, the administration claimed, the Chinese theft of intellectual property. The proposed tariffs would hit businesses from virtually every industry, including many that had little to do with intellectual property.
For Cobb and the 247 employees of Real Wood’s affiliated companies, the stakes were high. Their business is exporting hardwood from the forests of southern Missouri to their partners in China, who mill it into veneer, laminate it to a plywood subsurface and finish it into designer flooring. The partners then ship the engineered hardwood back to Real Wood, which sells it to high-end builders from coast to coast — an ocean-spanning supply chain that nevertheless keeps costs down. The simple possibility of tariffs had killed virtually all the company’s orders for engineered hardwood from China. Real Wood was already paying an anti-dumping duty of as much as 25 percent on much of the flooring it imported from that country, a tariff that the International Trade Commission had levied on a number of Chinese flooring companies whose prices it deemed to be below market value. The Trump administration’s proposal called for an additional 10 percent tariff, with the threat of a further 15 percent in 2019, which Cobb claimed would force Real Wood to make large price increases and would hamstring the whole industry.”