A U.S. government agency took the first step Friday toward imposing protective tariffs on $1.2 billion worth of furniture imports from China, a move that could further inflame trade relations between the two countries.
In a 6-0 decision, the International Trade Commission said there was a “reasonable indication” that the U.S. furniture industry had been harmed by sales of Chinese bedroom sets at less than fair value, a practice known as “dumping.”
The trade commission authorized the Commerce Department to proceed with an investigation of Chinese furniture imports. Analysts called it the biggest anti-dumping case brought against China, a country that has become a lightning rod for public anxiety about trade.
“The fact they got an injury finding on $1 billion worth of goods is very significant,” said former ITC Chief Economist Peter Morici. “It indicates that the dumping laws can be used to respond to some of the cost advantages that Chinese manufacturers have.”
Although the ruling was preliminary, companies in Southern California, a stronghold of furniture manufacturing in the West, also viewed Friday’s decision as significant. “Every single step is important,” said John Sandberg, president of Vernon-based Sandberg Furniture Manufacturing Co., one of two California members of a coalition that brought the dumping complaint to the trade commission.
China’s exports to the United States have soared since it joined the World Trade Organization and normalized trade relations with the U.S. three years ago. The growing U.S.-China trade deficit, which is expected to top $120 billion this year, has become a hot-button issue in the presidential election campaign.
Some manufacturers have blamed Chinese trading practices and its currency policy for a portion of the 2.8 million U.S. factory jobs lost since mid-2000. U.S. furniture makers have been particularly hard hit, shedding 107,000 jobs over that period.
The Bush administration has promised to increase its surveillance of Chinese trading practices and to crack down on any abuses. In November, it imposed protective quotas on imports of Chinese brassieres, dressing gowns and knit fabrics in response to a petition filed by U.S. textile makers.
Sandberg said his furniture company’s sales had fallen about 10% annually for the last two years as retailers, “including some of my best customers,” purchased fewer of his bedroom sets in favor of Chinese imports. The 86-year-old company has laid off dozens of employees over the last two years.
“Presuming that the rulings continue forward, and the [Commerce Department] and the ITC rule in favor of our petition, it means the Chinese goods will be priced higher and will compete on a fair basis,” Sandberg said. “Then maybe we can get some of our lost sales back.”
Trade analysts said Friday’s ruling appeared to be based on factual determinations by ITC staffers, not on political calculations by partisan appointees. Even so, they said, the election-year repercussions could be substantial, helping the administration build an impression that it is moving aggressively on illicit trading practices.
“It certainly will have some political effect because the U.S.-China trade relationship is so hot right now,” said Edward Gresser, trade policy director at the Progressive Policy Institute, a centrist Democratic think tank. “But I think it probably isn’t one that began with political intent.”
The furniture dumping case was brought by a coalition of 27 U.S. furniture companies and four unions that claimed that Chinese bedroom sets were being sold in this country at artificially low prices. They asked the U.S. government to impose import duties from 158% to 441% on such products as beds, headboards, footboards, night tables, dressers and chests.
Although the case affects less than 1% of U.S. imports from China, analysts said it would rank as the largest anti-dumping action brought against the country. “It’s an important step forward toward reclaiming our domestic furniture market from predatory dumping,” said Jim Schollaert, outreach director for the American Manufacturing Trade Action Coalition, which wants more restrictions on trade with China.
The anti-dumping case was opposed by more than 60 U.S. furniture retailers. “U.S. jobs will not be saved or returned,” said Mike Veitenheimer, vice president of Bombay Co. “Instead, U.S. retailer jobs may be lost, and U.S. consumers will face major disruptions.”
Last month, the Chinese government protested the Bush administration’s decision to launch the anti-dumping investigation. It said the proposed tariffs would have “negative effects on normal U.S.-Sino trade.”
Economist Gary Hufbauer at the Institute for International Economics, a pro-trade think tank, said he expected China to even the score if the U.S. imposed tariffs on furniture imports after completing its investigation sometime this spring.
“China will find some way to come back,” he said. “They have a history of soft retaliation. They’ll cancel an order for something. They won’t say why, but people will know the reason.”
Vieth reported from Washington and Robinson-Jacobs from Los Angeles. Times wire services were used in compiling this report.