First Trust Advisors LP Chief Economist Brian Wesbury discusses whether Trump's tariffs will affect inflation in “Varney & Co.”
Earlier this week, President Donald Trump promoted tariffs as a way to bring furniture manufacturing to North Carolina.
The president said Monday that he had “goed” to Tarheel Province to “buy furniture for the hotel,” and that the furniture manufacturing industry was “sweeped out.”
“All of that business went to other countries, but now it's all going back to North Carolina, where everything's furniture is,” he said.
President Donald Trump will sign a series of executive orders at the White House Oval Office on February 10th. (Andrew Harnik / Getty Images / Getty Images)
Trump commented on tariffs as he discussed the event regarding TSMC's newly announced plan to increase US investments in semiconductor manufacturing by $100 million.
Trump's latest tariffs: Here's what this will cost more consumers:
Tariffs on imports from Mexico, Canada and China came into effect Tuesday, knocking US northern and southern neighbors with a 25% tax. Meanwhile, imports from China have an additional 10% tariff based on tariffs of the same magnitude as the Trump administration had already imposed in early February.
Shannon Williams, CEO of the Home Furnishings Association, told Fox Businte in a statement that North Carolina was “a thriving hub for furniture making using Appalachian hardwoods,” US manufacturers have shifted elsewhere over time.
“I spoke with the CEO of the largest furniture manufacturer supplying the US and am not informing them of their intentions or plans to bring the production or gathering back to the US because they are interested in the lack of raw materials, components, high labor costs and employable workers,” she said.
According to Williams, some manufacturers are looking to avoid retaliatory tariffs because they are “planning open operations” in Canada and “serving Canadian customers that are once served by US businesses,” while also changing the tariff-driven costs for consumers.
Canada has placed retaliatory fees on numerous furniture types, food, apparel and other US products starting March 4th, Mexico also shows that it is planning retaliatory tariffs. China is already taking action in response to US tariffs.
“With hundreds of millions of manufacturing jobs in Asia, even moving 30% of the unemployed to (all kinds of) manufacturing will fill less than 60k of jobs. This is less than 0.01% of the required workforce.”
Williams argued that automation is “the only viable path to re-claim,” but noted that “small” furniture companies are putting money into such technology.
Furniture salon shopping room interior with sofa (istock / istock)
“There are concerns about increased costs for consumer demand and how sustainable manufacturing can reduce demand,” she added. “In some way, US consumers need to support themselves at higher costs, through higher labor costs for US production, tariffs on raw materials, or higher prices from products manufactured overseas.”
National and international tax lawyer John Mirikowski told the Fox business that tariffs could affect the North Carolina furniture export industry.
Trump tariffs on China, Canada and Mexico will take effect
There are over 800 furniture manufacturers in the state. According to the North Carolina Economic Development Partnership, its furniture manufacturing exports more than $250 million in goods each year.
“We rely on Canada because of the easy access to our borders,” he explained, adding that the provincial furniture makers “can face major challenges.”
“Taxes can reduce costs, disrupt the supply chain, and require high-end manufacturers to use low-cost materials, which can affect quality,” Milikowsky said.
“Large furniture manufacturers are already beginning to mitigate the impact of tariffs by moving production away from China, but smaller businesses will bear the brunt of rising costs,” he said. “Without the ability to move or coordinate supply chains quickly, these companies could face layoffs, reduce their businesses and suffer from supply chain disruption.”
Milikowksy described the tariff as the “double-edged sword” of American furniture manufacturing.
“While tariffs encourage more home furniture production and boost downstream industries like hardwood wood, companies that invest in Chinese manufacturing operations will have higher prices and these companies will have lower manufacturing capacity to shift the US or tariffs or no tariffs,” he told FOX Business. “They need time to reorganize supply chains, shift production and supply materials from tariff-friendly regions. This is a change that could rebuild the US furniture industry in the long term.”
US global imports of furniture reached $32.4 billion in 2023. Report It was published in February by Mann, Armistead and Epperson. Vietnam, China, Mexico, Canada, Italy, Indonesia, Malaysia, Taiwan, Thailand and India are among the top countries that supply it.
Trump's latest tariffs could raise car prices by $12,000
The company also sources the large amount of materials needed to make furniture from other countries, According to CNBC.
Customs duties on imports from Canada and Mexico could also affect home construction.
Construction workers will build a detached home in Westhampton Beach, New York, USA on Wednesday, May 22, 2024. This year's busiest travel season is beginning. (Bing Guan/Bloomberg via Getty Images)
“Taxes on wood and other building materials will increase construction costs, block new developments, and consumers will ultimately pay the tariffs in the form of higher home prices,” the National Association of Home Builders warned in early February.
Trump has shown that “mutual tariffs” will arrive in early April.
