Washington, DC, November 10--The federal government trimmed proposed tariffs on bedroom furniture imported from China, presenting good news for price conscious shoppers but dealing another blow to U.S. furniture makers, which have closed dozens of factories in North Carolina and Virginia in the past four years.
The reduction of six of the nine tariff rates initially set by the government in June means that big furniture stores will continue ordering heavily from Chinese factories, while U.S. furniture makers will face pressure to move more of their production outside the U.S.
Doug Bassett, an executive at Vaughan-Bassett Furniture Co., a Galax, Va., furniture maker that led the fight for tariffs on Chinese imports, declined to comment on the latest proposed rates. But he was optimistic that the tariffs could have a "dampening" effect on prices being driven lower by Chinese imports, because U.S. furniture makers would be allowed to ask the federal government to investigate specific Chinese manufacturers suspected of illegally dumping products at low prices.
Tariff rates for offenders then could be pushed much higher. Even the threat of additional scrutiny could help prop up U.S. factories threatened by the flood of Chinese imports.
Yesterday's ruling by the Commerce Department reduced the proposed tariff rate for 115 Chinese manufacturers to 8.6% from 12.9%. Those companies account for 65% of the bedroom furniture imported to the U.S. from China. The tariff rate was trimmed after regulators visited Chinese factories and recalculated their estimate of the advantages gained by those factories because they operate in a "nonmarket economy."
Similar calculations led regulators to lower the tariff rate for five major Chinese furniture makers that are subject to individual tariffs. Markor International Furniture saw its proposed tariff rate drop to zero from the previous 8.4%.
Proponents of Chinese imports hailed the ruling as evidence that many Chinese factories operate more like free-enterprise entities than government-controlled ones. "I am a happy man," said Keith Koenig, president of the 14-store City Furniture chain, based in Fort Lauderdale, Fla., which imports two-thirds of its wooden furniture, more than half from China.
Mr. Koenig said he expects to continue ordering heavily from leading Chinese factories, because the proposed 8.6% tariff on many items would add only about $100 to the retail price of a $1,700 bedroom set. Importers pay the tariff and typically try to pass along the cost to retail customers.
Owing to the mere specter of big tariffs, U.S. furniture stores and importers earlier this year scrambled to other low-cost countries to order bedroom furniture. Doing so boosted production capacity in Indonesia, Malaysia, Russia, Vietnam and Mexico, according to importers. That increased capacity ultimately will work to drive down prices for U.S. consumers, they said yesterday.
The trade case in question covered only wooden bedroom furniture, a specialty of the Chinese factories. U.S. retailers and importers feared that if massive tariffs were imposed, domestic manufacturers would seek similar measures for living-room furniture and upholstered furniture, such as sofas. Because the tariffs are considered relatively minor, it appears less likely that such measures will be pursued.
Regulators didn't back down from their June decision to nail a group of small furniture makers that produces less than 5% of bedroom furniture imported to the U.S. from China. Those companies were assessed a tariff of 198%, meaning the U.S. government essentially reiterated its finding that those factories operate under Chinese government control. The group includes one company initially given its own tariff rate but then moved into the hardest-hit category.
A final decision on the tariffs is expected by year's end.
