Even though the price of furniture is rising, the impact on consumers appears to be cushioned.
"While a 25 percent tariff suggests steep price increases and plummeting sales, retailers and industry experts said the furniture industry’s pain has been dulled by several factors, including furniture shipments from countries other than China and suppliers who agreed to cover some of the costs," the Wall Street Journal wrote in a new report
. "Customers often aren’t aware of the shifting prices."
The WSJ quoted a few members of the Home Furnishings Assocation (HFA), including New Jersey-based Farmhouse Store owner Ed Menapace and Pennsylvania-based John V Schultz Furniture president Matt Schultz.
"Menapace said he has made more than 30 passes through his 10,000-square-foot furniture showroom since the tariffs first hit, adjusting prices," reads the article
. "Still, he said his customers haven’t noticed the changes. ‘They don’t have a clue how much furniture costs,’ he said."
"’I don’t think it’s forced anybody to close,’ said Schultz, whose operations include a 90,000-square-foot store in Erie, Pa."
Furniture prices have indeed risen since the tariffs began to take effect in 2018. Prices fell about 1 percent a year from 2014 until 2017, and climbed 2.3 percent in 2018, according to the Deparment of Labor.
"Retailers credit two factors with cushioning the impact to consumers: increased furniture supplies from non-tariffed countries, and the availability of financing plans that allow shoppers to spread out payments over time," writes the WSJ.
Others warn of more danger.
"’This has been very challenging for the furniture industry as a whole because of the huge exposure that it has to China,’ said Peter Keith, a Piper Jaffray analyst who added that the discretionary nature of furniture purchases means the industry faces more potential for tariff-related financial difficulties than many other businesses," writes the WSJ. Keith recently spoke at HFA's CEO Summit, a gathering of Top 100 furniture retailers.
The trade war is having a major effect so far in 2019
- causing a $53 billion decline in U.S. imports from China and a $14.5 billion decline in exports to China, according to recently released trade data.
The numbers appear to be drastically in the favor of the United States. But because the U.S. exports much less to China than it imports, the smaller drop is actually a bigger percentage drop (15.5 percent from last year) - compared to a 13.5 percent decline for Chinese imports. Both countries appear to be hurting.
Chinese furniture exports to the U.S. fell in miscellaneous wood furniture (down 19 percent), wood seats (down 21 percent), and upholstered wood chairs (down 13 percent). China's overall economy grew just 6 percent in the third quarter - its slowest pace on record.
Other countries are seeing increased demand. Most notable of those is Vietnam, whose furniture shipments increased 51 percent since 2018.
There currently isn't a plan to rollback any tariffs. President Trump and Chinese President Xi Jinping were supposed to meet at APEC Chile 2019 on November 16-17, but the event was cancelled due to protests. If a deal can't be reached, the planned December 15 tariff hike will likely happen. We will have to wait and see.