How Tariffs Impact the Commercial Interiors Business
While we continue to watch the fall-out from the increase in tariffs due to our “trade-war” with the Chinese government, the unanswered question looms as to how will the commercial furniture market fare for 2020?
What Are Tariffs and What Do They Mean?
Tariffs are similar to taxes, except they’re set for specific products and trades. The goal of a tariff is to keep the prices of importing goods from another country versus buying local. The tariff tries to neutral out the baseline so the national economy won’t suffer. Unfortunately, it’s not that easy when it comes to interior design materials.
What Does This Mean?
Although the U.S. trade administration continues to encourage China in supporting fair trade with the USA, it appears—in the short term—the commercial furniture world is going to see an increase in price.
Several of the top items that are subject to the newest tariffs include both raw and finished wood and metal furniture parts—such as several different species of wood, copper, aluminum, steel, and tin products, in addition to electric lamps, other lighting fixtures, and wall covering made from PVC and other polymers of vinyl chloride.
What’s the Issue?
The issue is two-fold—with the 25% tariffs on Chinese-manufactured raw materials, the finished price for goods being sold by the U.S. is increasing, making U.S. made products less competitive than previously so.
At the same time, as China sees product no longer being purchased by America companies due to this increase in price, China is now looking to send manufacturing to countries not involved with sanctions—such as Vietnam, Taiwan, and other Southeast Asian companies.
While major industry organizations are working on finding solutions to the trade wars, there are struggles just beginning for local designers. The creativity of designers and clients is now limited because of expense or restricted items and materials. Even when it’s possible to source locally, the same materials a client might want won’t be available. These new sanctions and availability of materials need to be accounted for when starting any design project. Unfortunately, it’s the local, smaller design companies that will suffer from these new tariffs. Make sure you are supporting your local businesses so your favorite shops will be able to provide you with whatever you need.
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