IHFRA poll: Tariffs will shift manufacturing away from China

IHFRA Poll-web

November 2018—

More than 40 percent of International Home Furnishing Representatives Association members believe that tariffs will cause furniture suppliers to shift production to countries other than China, according to a recently released survey.

The survey was requested by IHFRA and conducted by the market research firm Leflein Associates. Leflein asked about 340 IHFRA members several questions to measure their perceptions of how current and future tariffs might impact the landscape of the home furnishings sector.

Based on input from those members, who represent independent sales representatives, suppliers, retailers and others active in the home furnishings sector, 35 percent of the respondents also predict that manufacturers will have to adjust pricing as a result.

When asked about who would ultimately foot the bill should higher-priced furniture emerge as a result of the tariffs, more than half of the survey respondents said the consumer would bear that financial burden.

“This survey underscores the volatility the industry may be facing should higher tariffs come into play in coming weeks and months,” said Ray Allegrezza, executive director for IHFRA.

The challenge for the industry, Allegrezza added, is that the issue of tariffs comes at a time when furniture sales, while reasonable, have not seemed to keep pace with a steadily improving economy.

And when that is coupled with the timing and focus of the impending tariffs, that could spell more trouble for the industry, Allegrezza suggested.

The IHFRA poll comes at a time when tariffs on Chinese goods are at the forefront of many retailers’ thoughts. The latest imposed tariffs against Chinese imports took hold in September and targeted some $200 billion at 10 percent. That rate will jump to 25 percent on Jan. 1.

“But here is the rub,” Allegrezza said. “While the earlier tariffs mostly hit materials, about 25% of the planned tariffs will target consumer goods directly, making the perceptions of our survey respondents right on the money,” he said.

Based on what Allegrezza sees ahead, sales of furniture, electronics and computers are all positioned to feel the brunt of higher prices.

President Trump and Chinese President Xi Jinping have agreed to meet this week at the G-20 summit in Buenos Aires, in hopes of resolving their intensifying trade conflict. These would be the first direct talks since August, but with both sides digging in their heels, there are few hopes the leaders can secure a breakthrough.