The price of some upholstered home furnishings will jump significantly after the Canada Border Services Agency slapped countervailing and anti-dumping duties on imports of recliners, sofas and other furniture from China and Vietnam.
The agency imposed provisional tariffs in early May ranging from 20.65 per cent to 295.9 per cent on some furniture being shipped from China, and between 17.44 per cent and 101.5 per cent on some imports from Vietnam, after determining there was merit to a complaint made by Winnipeg-based furniture manufacturer Palliser.
Love Dodd, owner of Victoria-based Dodd’s Furniture, said there may be good reason for the tariffs, but to enforce them without warning and at such high levels will sting both companies and consumers.
“With a pandemic going on, inflation going up, why do we have to put a 300 per cent tariff on everyday purchases? I understand if certain items were being manufactured here, but this includes futons and things not done here,” Dodd said, adding the tariff especially affects the affordable end of the market.
“This will definitely affect our business, but it will affect the consumer quite a bit more,” he said. “Someone coming in for a $998 sofa will now have to be prepared to pay $2,500.”
The tariff does not affect imports from other countries or the domestic furniture the store carries.
But Dodd noted that the domestic furniture comes at a premium price.
“That stuff from the Orient was keeping [stores] going and was ready for delivery right away, and consumers these days don’t want to wait, they want it yesterday,” he said.
The tariffs for imports from China and Vietnam include upholstered seating with motion features such as reclining and swivelling, stationary seating upholstered with leather, sectional seating, foot rests, day beds and futons.
In a statement Thursday outlining reasons for the tariffs, the agency said it started investigating on Dec. 21 under the Special Import Measures Act, which is designed to protect Canadian manufacturing from subsidies on imported products, imports being dumped in Canada at below domestic market price.
It noted there was reason to believe Canadian industry would be hurt and that provisional tariffs were warranted.
The agency said in addition to the original complainant, six other Canadian producers have been confirmed to make competing furniture items, while another 40 are deemed “potential producers.”
In a letter copied to Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland, Dodd said his company’s losses are already in the thousands having paid to have product, which will now be subject to tariff, shipped from China and Vietnam.
“Now a $25,000 container [of furniture] is $75,000 and when it hits port there is duty and freight so you’re looking at $100,000 in cost,” he said in an interview.
He said the company is stuck with product they will be selling at a loss as they can’t expect customers to pay thousands over the normal sticker price.
Dodd said smaller companies such as his will manage to escape without too much financial pain, but it could have a massive impact on chains such Leon’s and The Brick.
“They will get hit hard,” he said, estimating their losses will likely be in the millions.
Leon’s Furniture Ltd., parent company of Leon’s and The Brick, is the largest home furnishings company in Canada with more than 300 locations.
“A lot of companies across Canada are getting hit and some are considering going bankrupt,” Dodd said.
Rahim Khudabux said his Max Furniture store won’t feel much of the pinch of this tariff, but he is concerned about mid- and long-term effects.
Khudabux said they are now going to have to compete with more companies for supply from both foreign producers and Canadian manufacturers.
“There will be a lot of focus on made-in-Canada and that could affect our supply chain,” he said.
Dodd said the Canadian manufacturing sector requires eight months to ship product as it is. “If everyone is going there we will be waiting a year,” he said.
Khudabux said he hopes they will be taken care of, given their track record with regular suppliers. “But there will definitely be some added pressure on supply,” he said, noting the companies he uses to access foreign markets have been in touch letting him know what won’t be coming. “Suppliers are cancelling orders, meaning stores across Canada are cancelling orders.”
Dodd said his store was already challenged by COVID-19 causing shipping delays from both foreign and domestic suppliers due to lack of material and shipping containers without also facing the new tariffs.
The Canada Border Services Agency said its investigations of the dumping and subsidizing claims are ongoing with a final decision expected Aug. 3.
The Canadian International Trade Tribunal has begun an inquiry into the question of injury to the Canadian industry. Those findings are expected Sept. 2.