The price of hardwood plywood is on the rise after the U.S. Department of Commerce Feb. 27 levied preliminary duties of up to 27% on products imported from China. The increase comes as part of an investigation into the product category—which is used in cabinets, furniture, and decorative veneers—following allegations by domestic-manufacturers that Chinese product makers are being subsidized by their government to sell surplus product in the U.S. at one third of the cost to produce it there.

“They just want to get rid of product so they’re dumping product in the U.S.” says Kip Howlett, president of the Hardwood Plywood and Veneer Association, Reston, Va. “That drives down prices.” But some importers argue that other factors are behind China’s lower prices and that the product targets different markets than U.S.-produced hardwood ply.

Howlett testified in October 2012 before the U.S. International Trade Commission (ITC) alongside the Coalition for Fair Trade of Hardwood Plywood, an advocacy group comprising plywood manufacturers from states including Oregon, Virginia, North Carolina, and Maine. The group accounts for approximately 80% of domestic hardwood plywood production.

The government sent questionnaires to 18 Chinese hardwood plywood makers and issued a 27.16% tax on the imports of all but three due to their failure to respond. The three that responded showed no evidence of being offered a government subsidy and therefore do not face a tax. Any other Chinese product maker besides the 18 identified—Howlett says there may be hundreds—will be subject to a 22.63% import fee.

Since 2009, U.S. global hardwood imports have risen 44% to $1.38 billion in 2012. Of that, 63% came from China, where the U.S. that year imported nearly 60% more product, or a total of $872.4 million, than it did in 2009.

A 2008 report from the ITC helps to explain why: Consolidation in the U.S. building-products supply chain leveraged the buying power of wholesale distributors and large retailers who had the capacity to import large quantities of product. Combine that with higher domestic material costs and a tight labor supply, the report says, to understand why China--which had its own raw materials, ready labor supply, and low wage rates--was able to capitalize on the market opportunity in the U.S.

Ryan Loe, president of Shelter Forest Products, Portland, Ore., who testified alongside Howlett last year, disagrees with claims of product-dumping. He says China’s ability to sell product so cheaply in the U.S. is due to its rotation of high-growth forests in climates that accommodate species such as poplar and eucalyptus, whose fibers make for thinner, sturdier panels. Those panels are used as utility components in products such as cabinetry.

Loe says the ITC failed to draw a distinction between foreign-produced utility hardwoods and those made in the U.S., whose properties make them better suited for finished surfaces and veneers.

The issue extends beyond product type. “The problem,” he says, “is that the U.S. now has this increased cost for their materials and Canada and Mexico don’t. … All the other countries that use this material don’t have this cost.”

The countervailing duties will be finalized later this year. In April, the Commerce Department will hold a preliminary hearing to assess anti-dumping fees for individual companies.

“There will be some price increases,” Howlett says. “But that’s just because folks are going to have to abide by the law.”

What To Read Next
Houzz User Survey Forecasts More Kitchen and Bath Remodels
Labor Shortage Could Mean More Modular Building
Chinese Drywall Update: The 2012 Drywall Safety Act