WASHINGTON--A U.S. trade panel Friday cleared the way for the Commerce Department to consider imposing retaliatory tariffs on more than $600 million in annual imports of hardwood and decorative plywood from China.

The International Trade Commission found a "reasonable indication" that U.S. producers are being hurt by Chinese exports of the wood, typically used in flooring or furniture.

The decision allows Commerce to pursue an investigation launched last month into whether the wood is being unfairly subsidized and sold at below-market prices.

A group of U.S. producers have sought antidumping and countervailing duties of more than 300% on the Chinese goods. Members of the Coalition for Fair Trade of Hardwood Plywood include Columbia Forest Products of North Carolina, Commonwealth Plywood of New York and Oregon-based Murphy Plywood, Roseburg Forest Products Co., States Industries Inc. and Timber Products Co.

However, some distributors of wood products that sell the Chinese imports in the U.S. have warned that any tariffs could lead to price increases and hurt supply. Canadian distributor Hardwoods Distribution Inc. (HDIUF, HWD.T) said last month that since the majority of its imported hardwood and plywood comes from China, about 13% of its U.S. sales, the duties could hurt business.

Write to Tom Barkley at tom.barkley@dowjones.com

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