President Trump’s announcement of reciprocal tariffs last week took dead aim at some of the furniture industry’s largest and most impactful source countries, and they could trigger the most extensive realignment of global sourcing in a generation.
Vietnam, currently the largest exporter of furniture to the U.S., accounting for 37% of furniture imports, got hit with a 46% tariff rate. Vietnam was the primary beneficiary of the 2019 tariffs on China as many furniture manufacturers shifted production there following the imposition on the world’s second largest economy. That shift resulted in Vietnam growing from a distant second to the top spot among exporters of furniture to the U.S.
Between the 2004 anti-dumping duties on Chinese bedroom furniture and the 2019 China tariffs, Vietnam has seen its position as a global furniture resource grow dramatically. That appears likely to change in the wake of the most recent announcement.
China was hit with a 34% tariff rate, which according to a CNBC report will be in addition to the existing 20% tariffs, making China’s effective tariff rate 54%. Between the two countries, China and Vietnam represent 60% or approximately $15 billion of U.S. furniture imports.
America’s other leading furniture resources — Mexico, Canada, Italy, Malaysia, Indonesia and Thailand — all have been hit with double-digit tariff rates. Cambodia, which only recently began appearing on the list of top source countries, got hit with a higher rate than Vietnam, with the administration imposing a 49% tariff rate on the emerging source country.
The European Union, which includes key furniture exporters Poland, Italy, Turkey and Portugal, will face seemingly mild 20% tariffs. However, given those countries’ relatively higher manufacturing costs, it appears unlikely they will be able to gain significant ground because of the recent shifts.
The size and widespread nature of this latest round of tariffs virtually assures that all furniture imports to the U.S. will be impacted and that the current global sourcing environment will undergo a fundamental realignment.
What shape that realignment will take and who will be the ultimate beneficiaries remains to be seen. While the tariffs represent a major factor in the equation, they are far from the only determinant of where the sourcing roulette wheel will land.
Access to land, labor and infrastructure are critical, as anyone might remember the labor shortages, road and port congestion that accompanied Vietnam’s rise. There are also factors of labor productivity, political stability and overall safety to consider as many have discovered in the quest to turn Mexico into a replacement for China’s furniture manufacturing capacity.
And none of this considers the stated reason for the tariffs: to return manufacturing to the United States. Furniture industry insiders I’ve spoken with outlined a long series of obstacles to that occurring at scale. The most obvious of which is a shortage of labor, which is likely to get worse given the large number of industries impacted by the tariffs and who will be looking to onshore.
Stay tuned. There is much more to come.
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