Chinese-imposed tariffs impact high-end U.S. producers

Time：2019-10-04 15:12:23    Share：

Domestic furniture manufacturers, particularly those at the high end, have been hurt by tariffs imposed by China as they have seen one of their biggest international markets dry up almost overnight.

This is because furniture exports from the United States are one of the key areas affected by retaliatory tariffs as high as 25% implemented by China. The Chinese government implemented these tariffs as a form of economic protest to the tariffs the U.S. government has imposed on nearly all Chinese-made exports to the United States.

The impact on U.S. manufacturers perhaps has been one of the little foreseen effects on a trade war that some — including President Trump — believed would have benefited domestic industry.

Indeed, international sales make up a relatively small percentage of overall sales for the furniture industry. But China, for better or worse, has made up a big part of those sales. In fact, many say it’s become their most important international market in recent years.

Century Furniture has seen its China business drop off as much as 85% since early this year, said Alex Shuford III, CEO of company parent Rock House Farm Brands. He estimated that the same type of drop has occurred at sister company Hickory Chair, which like Century produces both high-end upholstery and wood furniture.

“It is very directly tied to this trade war,” Shuford said of the drop in business. “It was sudden and dramatic.”

The drop has been significant for both companies because it represented a significant portion of their international sales. Shuford estimated that China sales once were 60% to 65% of Century’s international business compared with about 40% at Hickory Chair.

Century is not the only high-end company affected. Mike Jolly, president of Baker Furniture, said that the price of product it shipped to China went up 25% due to retaliatory tariffs. As a result, it has seen its China sales drop at least 25% in recent months.

Century

“We don’t do a lot of sourcing from China, but on the other hand, we have a fairly large presence in China,” Jolly said. “The retaliation has had an impact on the top line.”

Jolly noted that while Baker has some competition in China from domestic producers such as Hickory Chair, the main competition is from Italian brands whose quality and — now price thanks to the trade war with the United States — is viewed as a strong alternative to made in America.

Andy Bray, president of high-end upholstery and case goods manufacturer Vanguard Furniture, said that China sales also have dropped for his company due to retaliatory tariffs. This has affected more of the company’s upholstery segment as it represents the bulk of its U.S. production.

“There is a large luxury market in China, and that is what has been affected by this,” Bray said, noting that most of its exports go to China.

Likewise, high-end case goods and upholstery manufacturer Sherrill Furniture also has seen an impact on China sales due to retaliatory tariffs.