Furniture industry thrown into chaos as tariffs cause retail prices to spike
Recent tariffs imposed by the federal government have created a ‘devastating situation’ for furniture retailers in Canada.
A coalition of small to midsize furniture retailers said the tax of up to 295 per cent on specific categories of upholstered furniture from China and Vietnam, imposed by Canada Border Services Agency on May 5, is a “financial bombshell, adding to the one present throughout the past few months, affecting retailers and the entire retail furniture supply chain.”
“To better illustrate the impact: sofas sold – including those already ordered, those in the ports, or en route in the supply chain – are subject to an increase of up to 295 percent, without any notice. For example, some upholstered sofas that used to cost $1,500 now cost $5,925. The imposition of the tax affects retailers and customers alike. At this cost, these products will not be able to be offered to consumers,” says the coalition. Diane J. Brisebois, President & CEO of the Retail Council of Canada, called it a “devastating situation” for furniture retailers across the country.
The situation began in 2020 when several Canadian furniture manufacturers launched a complaint alleging that furniture from China and Vietnam was being dumped in the Canadian market at below market prices and hurting Canadian businesses. That led to the tariffs. The Canadian International Trade Tribunal will investigate the matter this Fall.
“This tax creates an unprecedented economic and operational challenge in a pandemic context, where rising raw material and labor costs, international transportation issues, in addition to staff shortages, cast a shadow on the overall economic health of the furniture retail sector,” said Johannes Kau, President of Mobilia. Brisebois said the Retail Council of Canada disagrees with the tariffs and it has indicated it will be intervening in the case to represent furniture retailers across Canada.
Cascading impact, Things may change
Ray Kandola is the co-owner and president of City Furniture with 23 locations across B.C. and Alberta. He said his company has supported Canadian manufacturers for decades but added that Canadian producers alone can’t keep up with demand.
“We like to support Canadian manufacturers 100 per cent but they can’t afford to produce that much product,” he said. “Canadian manufacturers right now are four to six months of deliveries…can you imagine how they’re going to produce now for future?”
At Treehouse Interiors, while most of the merchandise is produced in North America, some is imported from overseas. Horner said he understands the government must act to protect Canadian manufacturers, but he’s disappointed the enormous tariffs went into effect without any notice.
“I was just shocked that the government could do something just overnight, so fast that would affect businesses this way,” Horner said. “They should just give notice…we’re going to do this effectively in three or six months, whatever it is.” He, too, had to cancel some orders because of the newly-imposed tariffs.
“We did not expect it. No one could imagine almost 300 per cent tariffs on goods that are coming in,” said Das Kandola, co-owner and general manager of City Furniture. “This was kind of a shock to us.”
“There are a few orders that we had en route that had been ordered some time ago and when this tariff came into effect, we canceled those orders, but not all retailers are able to do that,” Horner said. “They will be paying three times the amount for the goods.”
He also predicted that the newly-imposed tariffs will hit consumers in the pocketbook.
“It means that the average price will be going up for the average consumer,” Horner said. “Canadian goods are generally higher quality and more money. Chinese and Vietnamese goods are generally lower cost and now the retailers won’t be ordering those lower-cost versions.” The Canadian International Trade Tribunal is investigating and will release its findings on Sept. 2.
“We’re hoping there’s a rollback to a reasonable tariff,” said Das Kandola.
“That’s what we’re looking for”
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