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Staff file photo / Shaw Industries employees work at the company's flooring plant in South Pittsburg.

Luxury vinyl tile has been the fastest growing segment of the flooring industry, growing steadily in less than a decade to comprise nearly 20% of all new floors in the United States.

But the growing trade tensions between China and the United States threatened to weaken the growth of LVT before the import tariffs on the popular Chinese-made flooring was lifted last month, at least temporarily through next August. Despite the 9-month moratorium on the tariffs, there remains an uncertain trading future for LVT and other China-made products that local companies say they have grown to rely upon for their business growth.

"The tariffs (started in May and raised in August) have definitely been a challenge, having to deal with the disruptive increase in prices and trying to change supply chains without really knowing the long-term future," said Piet Dossche, the founder and CEO of US Floors who also serves as executive vice president of hard surfaces for Shaw Industries which makes its popular COREtec LVT line in China.

In response to appeals by Shaw and others, the Trump administration agreed in November to temporarily drop import duties on China-made LVT products until next August. The floorcovering items were among only about 100 of the roughly 7,00 items with new import duties on China-made goods that were granted temporary exemptions.

Last week, the Trump administration also dropped its plans to impose additional tariffs on $160 billion of other Chinese imports — duties that could have led to higher prices on a wide range of products sold by Chattanooga area companies. In return, U.S. Trade Representative Robert Lighthizer said China agreed to buy $40 billion a year in U.S. farm products over two years, even though U.S. agricultural exports to China have never topped $26 billion a year. In addition, Beijing committed to ending a long-standing practice of pressuring companies to hand over their technology as a condition of gaining access to the Chinese market.

The changes have been welcomed by local companies that source products from China.

For the amplified phone maker Clarity, the rising import duties on China imports threatened one of the company's most popular products before the Trump administration agreed last week not to raise duty fees and instead cut the Chinese duties in half.

"That was a huge relief, but we continue to wonder from one day to the next what is going to happen in the future," said Jamie van den Bergh, the owner of the Chattanooga-based Clarity.

Van den Bergh said the change was key for sales of the company's amplified phones sold in the United States to hearing impaired or elderly persons. The devices are engineered in Chattanooga and product marketing and distribution is done in the United States, but the product is manufactured in China. to keep the devices affordable

"Our (profit) margins are pretty tight so these import duties are a huge concern for us and the future of this product," he said.

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Staff file photo / Shaw Industries plant employeess in South Pittsburg help produce flooring plant at a plant.

The U.S. imposed a 15% import duty on Chinese-made cordless phones in September, which Van den Bergh said "was very hard to absorb" for Clarity. Last week, the duties were cut to 7.5%.

"What we were really scared of was the planned increase in import duties to 25%," he said. ""It's a real burden for a small company and I didn't know what to do about it."

In the Carpet Capital in Dalton, Georgia, China tariffs have split the titans of the flooring industry.

Mohawk Industries, the world's biggest floorcovering company, petitioned the U.S. Office of Trade last year to impose tariffs on Chinese imports, which account for nearly one fourth of all flooring products made in the world, including most vinyl flooring.

"They've done things to protect their industries and limit competition, while also giving their own businesses advantages for their exports," Mohawk Industries CEO Jeff Lorberbaum said about the Chinese producers earlier this year. "There needs to be the right balance, which hopefully we will get to. But that is not easy because the other countries don't want to give up the advantages that they have had for the past 25 years."

Shaw Industries, the world's biggest carpet maker, has a different view and Shaw joined nearly 150 other flooring-related companies this year in asking the Trump administration to lift the duties on China-made LTV products, which the U.S. Office of the Trade Representative did last week until next August.

"It's not like we moved LVT production to China to make it cheaper," said Tim Baucom, president of Shaw Industries who testified before Congress against the import duties. "The capacity and supply chains developed for this product in China and they have refined and developed it through multiple iterations and they have virtually all of the capacity."

The tariffs are distorting the rapidly growing market and, Baucom fears, could slow the overall growth in America's floorcovering industry.

Shaw is investing over $100 million in a new LVT manufacturing facility in Ringgold where it has converted a former rug production factory into making luxury viny tiles. But the company said it needs Chinese-made products to fill the growing demand for LVT.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340

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