Despite pause, US tariffs have put furniture, cabinet makers ‘in dire straits’: Industry association

The Canadian Kitchen Cabinet Association says it welcomes U.S. President Donald Trump’s postponement of tariff increases on furniture, cabinets and vanities, but the industry is still being devastated by the duties.

Trump imposed a 25 percent tariff on the sector in October, but blocked proposed increases to 30 percent for upholstered furniture and 50 percent for cabinets and vanities, which were scheduled to take effect Jan. 1.

Luke Elias, vice-president of the association, said, “Yes, there is 50 per cent relief. But our industry is still getting relief from 25 per cent.”

“You can’t reduce this overnight in a manufacturing environment.”

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 dealt another blow to an industry already dealing with a soft Canadian housing market, he said.

Manitoba-based Elias Woodwork employs more than 400 people and exports about 80 percent of its product to the United States. Company president Ralph Fehr said a 25 percent tariff was harmful but a 50 percent tariff would have been devastating.

“Who in the US wants to pay that much extra for Canadian content?” He said. “I don’t think that would really work well.”

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

Fehr said Ottawa has championed the virtues of exporting to the United States for decades and he has spent 45 years building businesses based on that model.

“We’re hoping they’ll go to bat for us and try to reach an agreement.”

Fehr said the tariffs have taken all the profits out of his business. For now, his company is looking to reduce costs and streamline operations 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 associated with Elias Woodworking). He said, at industry meetings in December, many companies had warned that jobs were going to be lost.

“This is very important,” he said. “We are in serious trouble.”

Don’t ignore industry in CUSMA review: Association

Ilyas said this then Ottawa’s Build Canada procurement policies have been helpful, he would like to see them extended to all taxpayer incentives for the building industry, including at the provincial level.

Elias said the federal government should also address the impact of imports of parts that arrive at below market value — a major problem for the U.S. cabinet and furniture industry.

He said low-cost parts from Asia are being brought into Canada, assembled and sold in the United States under the “Made-in-Canada” label. Canadian industry has also stated that imports of these parts are weakening the domestic industry.

In 2020, the US Department of Commerce imposed anti-dumping and countervailing duty orders on China from the Cabinet. The American Kitchen Cabinet Alliance has accused Canada and Mexico of acting as a conduit to thwart those measures.

“China did not leave the U.S. market. It just changed the return address,” Luke Meissner, a lawyer for the American Kitchen Cabinet Alliance, said in written testimony during a hearing on the Canada-U.S.-Mexico agreement on trade last year.

“We closed the front door to China. Canada and Mexico became side doors.”

Trump has said tariffs on furniture are needed “to promote American industry and protect national security.”

The trilateral trade agreement, widely known as CUSMA, is up for review this year and the US Kitchen Cabinet Alliance is considering strengthening the requirements of the rules of origin. Elias said American manufacturers are looking to build a “Fortress North America” ​​that would ensure cheap products are not dumped into Canada or Mexico.

CUSMA talks are likely to be tense and Trump has already claimed he is willing to walk away from the trade deal.

Ottawa was working to find an off-ramp to Trump’s regional duties, but any hopes of near-term relief for Canada were dashed when Trump, angered by an Ontario-sponsored ad criticizing the tariffs, canceled trade talks in October.

As the CUSMA review approaches, Elias said it is important that the cabinet and furniture industry is not overlooked in favor of higher-profile tariff targets such as steel and automotive.

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

“You’ve never heard of kitchen cabinets and we have them in every house.”