Canadian furniture producers respond to threat of 50% tariffs

Some are considering strategic moves to lessen the impact, although the answers on how to navigate such a high rate are unclear

WASHINGTON — The Trump administration’s imposition of 50% tariffs on Canadian-made products including furniture has furniture producers in Canada on edge as the resulting impact on the cost of their products for consumers could effectively price them out of the market.

News of the proposed Section 338 tariffs came earlier this week in response to tariffs Canada places on U.S. motor vehicles, dairy products and alcohol. They would take effect just after midnight Aug. 19, impacting some 350 product categories including furniture.

The implications are stark, particularly for wood furniture manufacturers whose products are among the 17 categories of furniture and furniture components on the list.

Some said they were in the early stages of addressing the situation as it was just announced and with the tariffs set to take effect in just a few weeks.

“We are analyzing the categories impacted, the impact on our business and will adapt to the new rules in supporting our partners,” said Mathieu Roy, sales manager at dining furniture specialist Canadel.

Others also are analyzing the situation and hoping for the best outcome, while also preparing themselves for the worst.

One wood manufacturer told Home News Now that it has already heard from retailers that were wanting to put their orders on hold because of the tariffs. The manufacturer eased some of their concerns, indicating that the proposal could change in the days or weeks ahead as it has with other tariff negotiations.

“Is it a threat? Is there legitimacy to it? We won’t know until we know,” the source said. “Let’s see what sticks.”

But the source also noted this type of negotiating tactic is extremely negative for businesses on both sides of the border.

“You can’t run a business with this going on,” the source said, adding that tariff threats over the past 18 months also have rallied Canadians, giving them a sense of national pride more than anything in the past 20 years. He described the general mood as being “We are just about done with it…The bottom line remains in that he (Trump) for whatever reason thinks that tariffs are a way forward for your country. But he is 100% wrong.”

Philippe Darveau, owner of wood furniture producer BDM + Furniture which includes Bermex, Bertanie, Dinec and Saloom, said that the company will likely weather the tariff situation as most of its production is done in the U.S. at Saloom’s manufacturing facilities in Winchendon, Massachusetts.

It has also considered shifting production of its recently acquired Huppé line to the U.S., a process that could have to be hastened because of the looming tariffs.

“If this happens, we will have to find a Plan B,” Darveau said. “We will have to see if we can put Huppé in our Saloom USA facilities. It is really too soon to say. Are these just threats or is this something he is going to go ahead with? It is huge and we cannot absorb it. We will have to find solutions really fast. But we are in a better position than others because we have a U.S. facility.”

But the company also will have to determine which if any Canadian-made components it uses for production in finished products made in the U.S. will be impacted by the tariffs.

“With Bermex, Dinec and Saloom, most of the raw materials like wood and wood parts and foam — most of this is coming from Canada, and some is coming from the States,” Darveau said. “If unfinished goods are also under the tariffs, we will be hugely affected. There is no solution right now. … This is a big number and it will be really tough to deal with.”

Upholstery manufacturer Décor-Rest is already paying Section 232 tariffs upwards of 25% that apply to its Canadian-made upholstery. Company President and CEO JR Marzilli noted that the 338 tariffs do not cover these products.

“As of right now, we are not impacted by the 338 tariffs,” he said. “Our numbers are not in the Section 338 listing.”

He also hopes the U.S. and Canada work out their differences as these costs ultimately are borne by consumers.

“It’s a real shame,” he said of the tariff situation. “I would really like to have American consumers not pay this nonsense, but they are paying it. It is absurd to think somebody else is paying it.”

He also believes that the U.S. and Canada are too important to each other to have such trade wars.

“Yes we may be a smaller country and yes we may have fewer people,” he said of Canada versus the U.S. “But we also are at each other’s borders. So to me we are stronger together than apart; that is all I can say. That is what I feel very strongly about.”

But none believe having to run a business with 50% tariffs is sustainable even over the short term.

“It would decimate Canada as a player in the industry,” said the unnamed source quoted earlier in this story in response to the impact on pricing and overall business.