by While some industry officials have applauded the 90-day reprieve, furniture production that has already moved to Vietnam and other countries may not return
HIGH POINT — Industry resources reacted with a sense of cautious optimism to a 90-day reduction on China tariffs that would likely have crippling effects on the industry’s relations with China now and in the future.
On Sunday, the two governments announced that previous tariffs as high as 145% had been reduced to 30%. China meanwhile agreed to reduce retaliatory tariffs on U.S.-made products to 10% down from 125%.
The move comes just over a month after the U.S. boosted tariffs on China from 125% to 145% on April 9. The weeks that followed stopped orders in their tracks, not just for furniture, but also for a host of other product categories that the U.S. relies on as part of its long-established trade with China.
Finished furniture was especially vulnerable to the high rate, particularly because of the price-sensitive nature of products ranging from bedroom and dining to living room furniture.
“The reduction is an important step forward,” said David Koehler, president of full-line furniture, lighting, bedding and home décor resource AICO. “While further progress is needed, we are hopeful it will lead to a more robust long-term agreement that will help everyone plan for what’s ahead and achieve greater stability and shared success.”
Officials also note that China is important because of the quality it offers in finished furniture and other product categories, not to mention its capabilities in the production of raw materials ultimately used in those finished products ranging from yarn and fabrics to metal components.
“While the vast majority of our production is in other countries, China is home to some exceptional factories equipped with world-class machinery, as well as highly skilled craftsmen and craftswomen,” Koehler noted. “Additionally, many of the raw materials used in home furnishings are sourced in China, regardless of their ultimate destinations, making its role in the supply chain especially significant. We are staying calm and measured to see how our two countries ultimately pave the way forward. We are hopeful a win-win outcome is possible.”
Others said they too were pleased at the reduction in tariffs, noting that it offers the possibility that the two countries can work together toward an even more palatable final agreement.
“I think it’s a step in the right direction for global trade,” said Jim Telleysh, president of upholstery manufacturer Spectra Home. “It’s definitely a step in the right direction. Is it where it needs to be? I don’t think so, but that is just a personal opinion. As much free trade that we can do, we are better off as a society because that is what our American consumers can afford.”
So these and other companies in the industry will be watching and waiting for a final resolution in the next few months or less that lowers the burden on manufacturers, importers — and ultimately consumers — alike.
Yet many have taken preemptive measures thus far by shifting sourcing to other countries such as Vietnam and Cambodia, in Spectra’s case, for example. Upholstery manufacturer Nice Link Home Furnishings also has shifted sourcing of most of the product it was making in China for the U.S. market to Vietnam.
Both companies, which also maintain some production in China, said they are staying the course with those moves regardless of how the tariff situation works itself out.
“We have already been producing there,” said Jay Carlson, president of Nice Link, which has sourced some of its upholstery in Vietnam for the past two years. “We are just going to be producing more there. We have probably doubled our capacity in the last month.”
The move, he said, was necessary to avoid major disruption for its customers, including an unsustainable price with a 145% tariff that ultimately was 170% with the previous 25% tariff still in place. With the new 30% rate, it effectively translates to a 55% tariff when combined with the 25% rate.
“This is the new reality — we have reacted to make sure we can service our customers without missing a beat and by offering the same type of products,” Carlson said, noting that 50 of its Chinese workers are training the Vietnamese workers to produce the same items once made in China. “We are doing side-by-side samples that are 100% indiscernible, if you will, so they don’t have to switch their floor samples out. All the materials and even the workers are the same, so the only difference is the country.”
He added that while the 55% tariff on Chinese-made furniture is still not ideal, it does provide opportunities for those customers who want special-order capability from Nice Link’s China production facilities in both fabric and leather, along with the ability to mix the finished goods on a single container.
“There is only a 90-day window, but I think that both countries want to step back from the ledge, and I think this is probably going to be baked in,” he added. “But who knows.”
Spectra also believes it is in a good position given its own diversity in sourcing.
“The good thing about Spectra is we own factories in China, we own a factory in Cambodia and we now have a partnership with a really good manufacturer in Vietnam that has four factories,” Telleysh said. “And we are in the process of partnering with another factory in Cambodia so we will have two factories in Cambodia probably by late summer.”
Yet for China, there are still certain unknowns, including the final rate and how much manufacturers, wholesalers and retailers are willing to bear of the final cost.
For some context, many in the industry will recall when the U.S. government imposed antidumping duties on Chinese-made wooden bedroom furniture in early 2005. At the time, while the Section A rate was about 6.24%, many producers fell above this with rates as high as 216%.
But there also was a threshold of what retailers and importers were willing to bear, and that threshold was not much above 15%. Even a low 6% rate prompted much of the industry to shift not only wood bedroom furniture, but eventually other wood furniture to Vietnam, particularly to gain consistency in finishing.
According to Richmond, Virginia-based Mann, Armistead & Epperson, Vietnam remains the largest shipper of wood furniture to the U.S., eclipsing China by three to four times the volume of shipments in the second half of 2024 compared to the same period in 2023. Thus, even with many companies being assigned a low, just over 6% duty rate, the business never returned to China, only to flourish in Vietnam.
A shift to Vietnam also occurred with both wood furniture and upholstery during the Trump administration’s first round of tariffs back in 2018. Much of that product also has not returned to China.
None of this is to say that China will not remain an important producer of furniture, fabrics and other components. But as we saw back in 2018, the shift to Vietnam and other countries has already begun. And for many, there will be no turning back.
