The Impact of Tariffs on Chinese-Manufactured Furniture

1. Tariffs Imposed on the Chinese Furniture

In December 2016, the United States International Trade Commission (ITC) voted to impose anti-dumping and countervailing duties on Chinese-manufactured wood bedroom furniture. The duties, which were finalized in early 2017, ranged from 10.36% to 12.25%. This was the first time that the ITC had imposed such duties on Chinese-manufactured furniture since the 1980s, when the US market was first opened to Chinese imports.

The ITC’s decision was in response to a petition filed by a coalition of US furniture manufacturers, who alleged that they were being harmed by unfairly subsidized and dumped Chinese imports. The petitioners argued that Chinese manufacturers had an unfair advantage in the US market due to government subsidies and below-cost pricing. They also claimed that Chinese furniture was of lower quality than US-made furniture and did not meet safety standards.

The ITC found that there was sufficient evidence to support the claims made by the petitioners and imposed the duties in order to level the playing field for US manufacturers.

2. The Consequences of the Tariff

2.1. Job losses in the United States

The US furniture industry employs approximately 150,000 workers. The imposition of tariffs on Chinese-manufactured furniture will likely lead to job losses in the industry, as US companies will be forced to either raise prices or move production offshore in order to stay competitive. In addition, retailers who import Chinese-made furniture will also be forced to pass on the increased costs to consumers, leading to higher prices for US consumers.

2. 2. Chinese furniture manufacturers will suffer

The tariffs will also have a negative impact on Chinese furniture manufacturers, who will likely see their exports to the United States decline as a result of the higher prices. In addition, Chinese manufacturers may be less able to compete with US companies if they are subject to higher costs due to the tariffs. This could lead to job losses and reduced economic growth in China.

3. Policy Recommendations

3.1. For the United States:

-The United States should consider exempting small businesses from the tariffs on Chinese-manufactured wood bedroom furniture. Small businesses are disproportionately impacted by tariffs, as they have less capacity to absorb increased costs or move production offshore.
-The United States should also consider providing financial assistance to domestic furniture manufacturers who are impacted by the tariffs. This could help offset some of the costs associated with moving production offshore or raising prices.
-Finally, the United States should work with China to address the underlying issues that led to the imposition of tariffs, such as government subsidies and below-cost pricing by Chinese manufacturers. Addressing these issues could help reduce tensions between the two countries and prevent future trade disputes. WOuld recommend removing this final sentence as it seems unnecessary given what is already stated in recommendation 3] It would be difficult for American policy makers negotiate with China over these types of issues without looking weak.[ perhaps reword this challenge so it does not focus on policy makers looking weak] Perhaps something like: Addressing these issues head-on would be a difficult task for American policy makers given recent history between these two countries.]

3. 2. For China:

-China should work with the United States to address the underlying issues that led to the imposition of tariffs, such as government subsidies and below-cost pricing by Chinese manufacturers. Addressing these issues could help reduce tensions between the two countries and prevent future trade disputes.
-China should also consider exempting small businesses from the tariffs on Chinese-manufactured wood bedroom furniture. Small businesses are disproportionately impacted by tariffs, as they have less capacity to absorb increased costs or move production offshore.
-Finally, China should consider providing financial assistance to domestic furniture manufacturers who are impacted by the tariffs. This could help offset some of the costs associated with moving production offshore or raising prices.
The tariffs imposed on Chinese-manufactured furniture will likely have negative consequences for both the United States and China. However, there are some policy recommendations that could mitigates these impacts.

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