Officials are hopeful that the 2 countries soon will reach an agreement to lower or eliminate proposed 25% tariff
TORONTO — With 25% tariffs on Mexico-sourced products on hold, many are breathing a temporary sigh of relief given how important Mexico is to their product mix.
As the tariffs were expected to go into effect immediately, many goods coming across the border starting today initially were susceptible to cost increases that would likely make a bedroom set retailing at $2,000 as much as $500 more expensive for consumers without major concessions from manufacturers, importers and retailers selling the product.
In today’s world of still tight margins and a tight retail sales environment for furniture, the type of concessions that would hold the line on prices for the consumer are highly unlikely.
And while industry officials are optimistic that a deal will be reached to eliminate or limit tariffs on Mexico in the next 30 days, they are working to keep goods flowing while also servicing their customers.
“One thing that I have learned is that when we have volatile situations like we have now, it is not wise to make hasty decisions, and it is not wise to panic your customers,” said Ralph Orozco, founder of case goods importer Horizon Home, which imports its finished products from Mexico.
He noted that there already has been a lot happening in Mexico behind the scenes to deal with issues of concern to the U.S. ranging from illegal immigration to the handling of drug cartels.
“Our position right now is that things are going to be changing on a daily basis if not an hourly basis,” he said. “We are going to evaluate the chain of events this week before we make any big announcements to our customers and wait to see the developments of what is happening. What we do know is that Mexico is bending over backwards to make a deal with the U.S.”
In the meantime, he said, Horizon Home has a plan to move forward.
“We are continuing production and we are continuing to service all of our customers,” he said. “And if it comes down to tariffs, we will work out a situation that is fair and that has the least amount of impact to our customers. We believe this is a short-term situation.”
For the time being, the pause in tariffs offers a temporary reprieve from what could have been immediate and major price increases on finished goods for consumers even with manufacturers and wholesale suppliers bearing some of the additional costs.
Before the pause, goods coming across the border faced immediate tariffs, although there were some minor allowances for goods shipped from Mexico and Canada, according to logistics services firm CV International. Companies also had to produce paperwork to show when they actually were in transit.
“The additional tariffs are to be effective for goods entered or withdrawn for consumption on Tuesday, Feb. 4,” CV International said in an email alert on Monday morning relating to tariffs on Mexico, Canada and China. “There is an exception to the tariffs for goods that were loaded onto a vessel at the port of loading or in transit on the final mode of transport … before 12:01 on Feb. 1, 2025.” This is an important exception for goods of Chinese origin already in transit and goods currently being held in the U.S. under a warehouse entry. This will have a much lower impact on goods crossing the northern or southern borders. Importers must be able to certify their goods were in transit prior to Feb. 1 to avoid the tariffs.”
The firm added that during the pause, “Mexican and U.S. officials will resume negotiations in hopes of reaching an accord. Mexico had earlier announced that they would impose undisclosed retaliatory tariffs on U.S. goods. Those tariffs will not move forward during this pause.”
Sergio Zorio, an industry consultant who handles sales and business development for Mexico case goods producer Meximuebles, said the company continues to manufacture and ship product to its U.S. customers. High-volume orders can ship in 20 days, and other orders can ship in four to six weeks, potentially allowing them time to cross the border within the allotted time.
He said the company actually had a couple of containers en route that may have faced the tariff had there not been a pause.
“We took the chance and it worked out,” he said, noting that the company probably would have eaten the tariff had it remained in place. “It’s business. If we sit with a $40,000 order in Mexico, we are taking a risk that we are not going to sell the product. It is better for the customer to have it and to make money and for us to get more orders.”
Right now, the hope is that the two countries reach a deal that will avoid or minimize tariffs.
“My belief is that he is using this as a tool to close the border,” Zorio said of President Trump’s strategy. “Trump wants the best for this country.”
While many think the Mexico tariffs will be reduced or eliminated entirely with further negotiation, Luis Ruesga, chief executive officer of Zuo Modern Contemporary, is not so sure. He said that while things like agricultural products could be removed from tariffs, he believes things like cars, refrigerators, mattresses and sofas might not because they can still be made in the U.S.
Today Zuo sources about 20% of its product mix — primarily upholstery — in Mexico with the balance coming from other countries in and outside Asia.
“The advantage Mexico has more than price or quality is its proximity,” he said. “We can turn around products in a matter of weeks and that is something you cannot do overseas.”
“It does affect us especially because we like to say we are a global company, and that we source from everywhere,” Ruesga added, noting that while it would like to continue sourcing from Mexico, the threat of tariffs is having it consider bringing back some production to North Carolina.
“We don’t know if they will come to an agreement or not,” he said.
Note: News reports later in the day also indicated that proposed 25% tariffs on Canada products also were suspended for 30 days. This also could have far-reaching consequences for the industry as a list of products affected issued by the Canadian government shows that most if not all residential furniture produced in Canada would face a 25% tariff.