Despite pause, U.S. tariffs leave furniture, cabinet makers 'in dire straits': industry association

The canadian river Kitchen locker connection says piece it welcomes U.S. Chair Donald Trump's postponement of tariff increases on furniture, cabinets and vanities, the industry is still being devastated by the duties.

Trump hit the sector with 25 per cent tariffs in October but paused a promised increase to a total of 30 per cent for upholstered furniture and to 50 per cent for cabinets and vanities that was set to take effect Jan. 1.

"Yes, 50 per cent is a relief. But our industry is still reeling from the 25 per cent," said Luke Elias, the association's vice-president.

"You just can't mitigate that in the manufacturing environment overnight."

Kitchen cabinet manufacturing is a $4.7-billion industry in Canada and Elias said the sector exports about $600 million worth of product annually. Trump's tariffs delivered another blow to an industry already dealing with a soft Canadian housing market, he added.

Manitoba-based Elias Woodwork employs more than 400 people and exports about 80 per cent of its product to the United States. Company president Ralph Fehr said the 25 per cent tariffs are damaging but a 50 per cent duty would have been catastrophic.

"Who in the U.S. Would want to pay that much extra for Canadian content?" he said. "I just don't think that would have worked out real well."

Fehr said his company uses American materials — such as hardwood lumber from the Appalachians — and turns them into finished products it then sells to customers in the United States.

Fehr said Ottawa espoused the virtues of exporting to the United States for decades and he's spent 45 years building a business based on that model. 

"We're kind of hoping they go to bat for us and try to come to some agreement."

Fehr said the tariffs have taken all of the profit out of his business. For now, his company is looking to reduce costs and streamline to weather the storm.

The industry has seen layoffs since Trump's tariffs were implemented in October, said Elias (who, despite his surname, is not connected to Elias Woodwork). Industry meetings in December saw multiple companies warn that job losses were on the horizon, he added.

"It's very critical," he said. "We're in dire straits."

Elias said that while Ottawa's Build Canada procurement policies have been helpful, he wants to see them extended to all taxpayer incentives for the building industry, including those at the provincial level.

Elias said the federal government must also address the effect of parts imports coming in at below market value — a major irritant for the American cabinet and furniture industry.

He said low-priced parts from Asia are being brought into Canada, assembled and sold in the United States under a "made-in-Canada" label. The Canadian industry also has said these parts imports are undermining the domestic industry.

In 2020, the U.S. Commerce Department imposed anti-dumping and countervailing duty orders on cabinets from China. The American Kitchen Cabinet Alliance has accused Canada and Mexico of acting as conduits to circumvent those measures.

"China didn't leave the U.S. Market. It just changed the return address," Luke Meisner, counsel for the American Kitchen Cabinet Alliance, said in his written testimony during a hearing on the Canada-U.S.-Mexico Agreement on trade last year.

"We closed the front door for China. Canada and Mexico became the side doors."

Trump has said the tariffs on furniture are needed to "bolster American industry and protect national security."

The trilateral trade agreement, widely known as CUSMA, is up for review this year and the American Kitchen Cabinet Alliance is looking to strengthen rules-of-origin requirements. Elias said American manufacturers are looking to build a "Fortress North America" that would ensure cheap products aren't dumped in Canada or Mexico.

CUSMA negotiations are likely to be tense and Trump already has claimed he's willing to walk away from the trade pact.

Ottawa had been working to find an off-ramp to Trump's sectoral duties but any hope of near-term relief for Canada was dashed when Trump — angered by an Ontario-sponsored ad criticizing tariffs — called off trade talks in October.

As the CUSMA review approaches, Elias said it's critical that the cabinet and furniture industry is not ignored in favour of higher-profile tariff targets like steel and automotives.

He said there are 3,500 companies, employing more than 25,000 Canadians, being slammed by the duties.

"You never hear about kitchen cabinets and we're in every home."

The Canadian Press

Kelly Geraldine Malone is a reporter for The Canadian Press.

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