Furniture retailers reel amid trade war crossfire

The trade war between the United States and China is taking its toll on retailers and consumers in a major US industry sector: furniture.

China is the biggest exporter of furniture to the US, shipping $34 billion worth of tables, chairs, sofas and other items in 2018, according to The Wall Street Journal.

US retailers selling furniture made in China said they are faced with uncertainty－and their customers, higher prices－since US President Donald Trump imposed a 10 percent tariff in September 2018 on $200 billion worth of Chinese products. The tariff rose to 25 percent in May.

US consumers spent $114.2 billion on furniture in 2018, up 6.7 percent, according to the US Bureau of Economic Analysis, or BEA.

China accounted for 57.4 percent of total furniture imports to the US for the tariffed categories in the 12 months to May 31, according to Panjiva, a division of S&P Global Inc, which tracks the flow of goods overseas.

"It's a mixed bag (for retailers). Some sell US products; some sell Chinese. There are companies that are absorbing some of those tariffs and some are raising prices. There is uncertainty among retailers as a group," Sharon Bradley, CEO of the Home Furnishings Association, told China Daily.

The National Retail Foundation, or NRF, warned that tariffs would add $4.6 billion a year to consumer spending on imported furniture. For shoppers, higher prices could become more widespread as some retailers grapple with ways to recoup what they have lost paying the tariffs.

From 2014 to 2017, furniture prices in the US fell 1 percent a year. They rose 2.3 percent for the year ending September 2019. During that period, furniture shipments from China to the US declined 30 percent, according to Panjiva.

Francis O'Brien owns two Furniture Market stores in Modesto, California. He said he adds 3.75 percent to every invoice to pay for the 25 percent tariff.

"So far, I've charged my customers about $40,000 in tariffs," O'Brien told China Daily. "I don't hide it."

Todd Wanek, chief executive of Ashley Furniture Industries, the largest US home-furnishings manufacturer, retailer and importer, with profits of $4.7 billion in 2017, said his company hasn't passed on the cost of the tariffs.

Wanek said his Arcadia, Wisconsin-based company has avoided doing so by gradually reducing dependency on China-made furniture in favor of tariff-free Vietnam.

"Everyone's hoping (tariffs) will go away. The only certainty is there's a 25 percent tariff, and you have to run your business looking at that being in place for the foreseeable future," Wanek told Furniture Today, an industry trade publication.

Wayfair, a large furniture seller in the US, saw its publicly traded shares plunge 14 percent on Oct 31. It said tariffs were partly to blame for a third-quarter loss as its suppliers were affected.

Hooker Furniture Corp, headquartered in Martinsville, Virginia, reported in September a 52.1 percent drop in second-quarter net income to $4.2 million as sales took a hit from the tariffs. Net sales were down 9.7 percent to $152.2 million.

In May, Trump justified the 25 percent tariffs on Chinese goods: "Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch!" he tweeted.

While furniture shipments from China to the US have gone down, shipments from Vietnam have increased by 51 percent, making it the third-largest furniture supplier to the US.