by While many applaud the 30-day delay announced this week, they also are having a difficult time pricing finished product, including custom orders
DURHAM, Ontario — While pleased about the 30-day delay in the imposition of tariffs on Canadian-made goods, Canadian furniture manufacturers are awaiting a resolution that eliminates them entirely or lowers the rate well below the proposed 25%.
In some cases, the uncertainty is just as challenging, as companies — including those that produce custom orders — don’t know what to charge on finished product should negotiations falter or not produce the desired outcome by later this month or early March.
“The reality of it is that we are still sitting here in quite a state of flux,” said Luke Simpson, president of case goods manufacturer Durham Furniture. “I still can’t tell a retailer what I am going to charge them in March. But we are taking orders. I think there are a lot of retailers that up until last weekend didn’t think there was any reality to this. I think they thought it was a lot of posturing. Now it turns out that it was, but it’s still tough to make business decisions with that level of uncertainty.”
He also noted that the 30-day delay in the implementation of tariffs gives the company the ability “to do some better strategizing right now.”
“It gives us internally some time to really assess what it will look like if it happens,” he said, adding, that as negotiations between the two countries continue, many are hoping for a positive resolution. “I believe there is probably a really good chance that it will fall off the table now. But it is still going to disrupt things for the next few weeks while we are waiting for that to happen.”
For example, he noted, that while most existing customers are continuing to place orders, newer customers have been waiting to see how things play out since mid-November, when word of possible tariffs was first discussed by the incoming administration.
“It is one thing if you are already doing business —you just carry on and deal with it when it becomes a reality,” he said. “But you are not going to enter a new business relationship that way. … We have some really good prospects, but we have not converted any of them yet.”
Matthieu Roy, sales manager for case goods manufacturer Canadel, said that the monthlong delay is good news and helps any manufacturer that needs time to adjust. But he also noted it comes with challenges, too.
“The delay is good for the industry, but not knowing when and what the tariff is going to be is the toughest part,” he said. “What do we tell our retailers? And what price should we sell it at?”
This is especially complicated for a manufacturer like Canadel, which does about 90% of its business with custom orders. If the consumer puts down a deposit for this type of product, they are not likely to want to spend more than the initial price, meaning that the retailer and manufacturer likely will get hit with the additional cost. And no one believes a 25% tariff is sustainable for the industry now or in the future.
“There is no room for the manufacturer and there is no room for the retailer to absorb that,” Roy added. “So it needs to be a partnership.”
And while the company will continue to ship finished product leading up to any tariff going into effect — estimated at 30 trailers per week — most everything that’s in the backlog could face a tariff as it takes four to six weeks to complete. In other words, it wouldn’t have time to cross the border before being hit with a tariff, whatever the rate might be.
“So there is a lot of uncertainty currently that goes all the way down to the RSAs in the store,” Roy said. “They are not sure what they can sell and what price they can sell it at.”
The company could ship more product that is sold in a non-custom manner, allowing goods to flow more quickly across the border. But Roy said that is not the way the retailer or the consumer is used to selling and buying the Canadel line. The value lies in the custom finishing and fabrics offered, for which the customer is usually willing to wait.
“When they buy Canadel, it is not for the most part to have it in stock and ready to deliver to the customer tomorrow,” he said. “It is really about all the custom options.”
Regardless, much business has been on hold starting in January, including some orders and new business. Retaliatory tariffs that Canada has promised also further complicate the matter as they would increase the cost of materials that Canadel and other manufacturers buy from the U.S., ranging from some raw lumber to finishing and packaging materials.
Angelo JR Marzilli, president and chief executive officer at upholstery manufacturer Décor-Rest Furniture, also voiced concern over retaliatory tariffs as it would potentially boost the cost of materials the company imports from the U.S. such as springs, lumber and fabrics by another 25%. Ultimately, this likely would further increase the cost of the finished product.
“You can’t be paying a duty twice at 50%,” he said. “There is something wrong with that.”
But the company has assured its customers that should a tariff take effect, customers will not have to worry about any additional costs related to tariffs for the first six months.
“As soon as Donald Trump started talking about tariffs we went out immediately and contacted all of our U.S. partners,” Marzilli said. “We advised them in a letter that we will sort this out and will look after it however we possibly can. So for the first six months, or whatever comes to fruition, we will look after it entirely. That is what we committed to them, and we were true to our word. Over the weekend (before the proposed tariffs went into effect), we followed up with another email to them stating that now that the tariffs are coming, we are going to deliver on our word and manage all the duties.”
With the delay, that did not need to happen as planned, which Marzilli said gives customers time to replenish their mix of product before anything does take effect, depending on how the negotiations between Canada and the U.S. work out.
“Luckily, it didn’t come to fruition, so we didn’t have to deal with it,” he said. “But we will have to start planning for it should it come to fruition in 30 days.”
Samantha Mund, head of customer service and marketing at case goods manufacturer West Bros., said that some buyers are responding to the uncertainty of potential price changes by placing heavier orders in recent days, allowing them to receive product sooner than later. At the same time, she noted, the company also is observing a “wait and see” approach from others that have been thinking about adding new products to their mix.
“If tariffs are enacted, there could be an impact on pricing, as a substantial portion of our lumber supply is sourced from the United States,” she noted. “In response, we are actively strengthening our supply chain, optimizing costs and exploring new opportunities to deliver enhanced value and service to our customers.”
The goal is to achieve results that will allow the company to offer “greater value and service to our customers.”
“Our team is closely monitoring the evolving situation and maintaining continuous dialogue with our customers to ensure that we are aligned with their needs,” she said. “We remain confident that a positive resolution will be reached, allowing us to continue delivering our high-quality products across both Canada and the U.S.”
“We remain hopeful that cooler heads will prevail, recognizing that the close economic ties between the U.S. and Canada across various industries make it in the best interest of both parties to avoid the implementation of tariffs,” she added.
Others also said that while answers remain elusive at this stage, they will work through the situation to the best of their ability for their customers’ benefit.
“At the end of the day, if something happens, we are all going to have to deal with it,” said Marzilli, of Décor-Rest. “I would hate to lose the momentum that we have been gaining for a number of decades in the U.S. We have always been a Canadian company that sells to everybody, and I have to say that we’re way stronger together than independently and that’s true with any country.”
Roy, of Canadel, agreed that the partnerships it has built with customers in and outside the U.S. remain critical now and in the future.
“Canadel is a strong company that has been in business for more than 40 years,” he said. “We have built relationships and partnerships with our retailers, and we want to support them in tough times. We hope they will support us as well, and we are doing everything we can to keep the business going with those retailers and make sure that all parties benefit from this partnership financially. We really want to reduce the impact of this.”
Editor’s note: In a related development, Canadian wood furniture manufacturer South Shore Furniture said it is laying off 115 workers in response to a drop in sales related to proposed tariffs. This includes 97 people at its headquarters and factory in Ste-Croix, Que., southwest of Quebec City, and another 18 people at its operations in the Eastern Townships according to the Canadian Press. The publication said that uncertainty around the tariffs has significantly affected sales, as an estimated 70 per cent of its products are shipped to the United States. Home News Now has reached out to the company for additional comment. It also has reached out to Dorel Home, Bermex and Palliser regarding the tariffs and is still awaiting a response.
