China Tariffs Contributed to Product Shortages: Report

By Alan Wolf, YSN

A report in FurnitureToday magazine points to stiff tariffs on Chinese-manufactured goods as a contributing factor to today’s furniture and appliance backlogs.

According to the publication, 25 percent tariffs, imposed on China in 2018 to protect American businesses and reduce the trade deficit, shifted sourcing of furniture, appliances, electronics and their components to locales like Vietnam and Malaysia. But factories there couldn’t compete with the mass production capabilities of China and became swamped by higher demand in the wake of the pandemic.

See: BrandSource Members Prepare for Tariff Repercussions

The problem has only been compounded by COVID-related plant closures and a shortage of labor and shipping containers.

“It starts from the fact that Vietnam has been overcrowded with a number of orders,” said Michael Amini, founder and CEO of AICO home furnishings. Indeed, furniture shipments from China to the U.S. fell 28 percent from 2018 to 2019, the report noted, while U.S. furniture shipments from Vietnam and Malaysia rose 35 percent and 28 percent, respectively, that same year.

“Frankly, I feel this situation is not going to be resolved soon,” Amini told FurnitureToday. “A lot of factories (in China) closed, and subcontractors started shutting down as well. Now we are at a crossroads in the furniture industry. The whole infrastructure we built in China over the past 30 years is melting away and being destroyed in front of our eyes.”

Amini added that China remains the best choice for the furniture trade due to the country’s vast pool of skilled and experienced workers, engineers and line managers. Nevertheless, he believes the supply chain “will stay like this until companies start scattering into different countries.”

Click here for the complete report.