How tariffs are squeezing the U.S. furniture business

Credit: Reuters Studio
Published on May 31, 2019 - Duration: 02:19s

How tariffs are squeezing the U.S. furniture business

Joseph Shame of Delta Children is among more than a dozen furniture retailers, manufacturers, and vendors who told Reuters they are taking steps to mitigate the impact to their businesses from the U.S.-China trade tiff.

Yahaira Jacquez reports.

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How tariffs are squeezing the U.S. furniture business

Joseph Shamie is president of Delta Children, the nation's largest supplier of kids furniture.

It imports cribs and bassinets from China and sells them to major U.S. retailers - like Target and Walmart.

But with China and the U.S. embroiled in an all-out trade war, Shamie's feeling the hit.

(SOUNDBITE) (ENGLISH) PRESIDENT OF DELTA CHILDREN JOSEPH SHAMIE SAYING: "Retailers are canceling orders, putting them on hold because they're not sure if this duty rate is going to stay in effect or not stay in effect.

So we're in a dilemma.

Uncertainty is the worst thing you can do for business." Shamie says he lost between $8 to 10 million in sales when U.S. President Donald Trump slapped 10 percent tariffs on Chinese goods in September.

(SOUNDBITE) (ENGLISH) PRESIDENT OF DELTA CHILDREN JOSEPH SHAMIE SAYING: "Originally we thought the 10 percent was going to go away so we only raised our prices a few points to compensate." He was just recovering from that blow when Trump raised tariffs to 25% in early May as talks with China fell apart.

(SOUNDBITE) (ENGLISH) PRESIDENT OF DELTA CHILDREN JOSEPH SHAMIE SAYING: "We were wrong - the 10 is still on and the 25 percent is going into effect any day now.

So how do you plan?" Shamie's situation is a window into how the trade spat between the world's two largest economies is throwing the global furniture business into disarray.

Reuters Lisa Baertlein: "What a lot of big retailers like Walmart are doing is squeezing costs wherever they can.

That means sometimes they're canceling orders if a factory says they can't take on the extra expense or they're putting in tough terms that say you can't raise prices once we've set them or they're just moving the sourcing somewhere else." Macy's said the higher tariffs will hit its furniture business particularly hard… while Williams-Sonoma and IKEA are among the retailers shifting sourcing away from China.

But that doesn't work for Shamie.

"We cannot move the production overnight.

I have hundreds of people in China who test products every day to make sure our children our safe in a Delta crib and I cannot move the production so simply." He says his company has been working with some suppliers in China for over 40 years.

And while he doesn't want to cut those relationships, he says a 25 percent duty would force him to.

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