Q&A: MSI's Rup Shah Offers Perspective on Proposed Tariffs

Q&A: MSI’s Rup Shah Offers Perspective on Proposed Tariffs

MSI Co-President Rupesh Shah (right) with Co-President Rajesh Shah (left) and Founder/CEO Manu Shah (center). (Photo courtesy MSI.)
August 21, 2018 from Floor Trends

FT: Why was it important for MSI to join the American Consumers & Workers Justice Coalition (ACWJC) opposing tariffs on Chinese-imported luxury vinyl tile (LVT), and what do these tariffs mean for the flooring industry?

Shah: Quite frankly, it’s creating a tremendous amount about upheaval overall. It’s a little bit about LVT, but quite frankly, all my comments not just cover LVT but pretty much all products in the building materials industry. If you look at it within the flooring world, pretty much everything’s on the list, so that includes the porcelain ceramics, glass mosaics, wall tile, all natural stone, so it’s going to have effect across all hard surfaces from China.

I think LVT or vinyl tile is disproportionately affected. More LVT comes from China relative to other countries then that anywhere else, but from our perspective, it’s simply putting a tax, whether it’s 10 or 25 percent. There’s no doubt, if it goes to the effect, prices will go up and it’s going to hit the consumer and what you would expect would happen is one of two things: demand will go down and prices will go up.

For vinyl tile in particular, it’s an affordable item compared to most other hard surfaces. So, it’s a disproportionate—I would say tax—on the lower part of the market. You are disproportionately taxing lower to middle class folks, which I’m not sure that’s really the purpose intended purpose of these Section 301 tariffs. These Section 301 tariffs were meant to go after tech, to my knowledge, the Made in China 2025 initiative, as well as, or related to that the technology transfers that China forces on U.S. companies who want to do business in China. From everything I’ve read and spoken to the two participants in the industry, that had never happened in any of the flooring segments including vinyl tile. It doesn’t really follow the mission of why we’re using these Section 301 tariffs as well.

Finally, as you well know, there’s hundreds of distributors, thousands of retailers, and LVT has become a very critical part of their business. It has helped them come out of this recovery and it’s the one of the few bright spots within the flooring industry. With that has come increased investment, increased jobs, even across the installation base. Installers are set to suffer as well. Across the board, the distributor, installers, retailers—it’s going to affect jobs, so quite frankly, it makes not sense versus what the intentions were.

It was a no brainer to join the coalition. This is exactly the type of causes I would say the industry needs to work together on. The government is trying to get China hard, so they’re coming up with arbitrary lists, and it’s our job, I think, to all work together to make it known that this is doing more damage than help. And then I think the coalition is a great example of how we should all work together to do that.

FT: You are going to D.C. to testify?

We will testify [August 21]. This is a big deal. It can have very negative effects on the flooring industry, and anyone who doesn’t see it that way probably hasn’t been educated enough, and that’s one of the things that our coalition wants to do.