The price of sofas could increase in the coming months in the country. The reason ? Canadian furniture manufacturers, who believe they are facing unfair competition, recently asked the federal government to tighten the screws on their competitors from China and Vietnam. They are calling for the imposition of customs tariffs on “padded domestic seats” imported from these countries, products that can be found in many stores here.
It’s a feeling of déjà vu for Quebec furniture retailer Structube, which imports its sofas from Asia and distributes them across Canada.
Three years ago, the company received a hefty bill from the Canada Border Services Agency (CBSA) following the entry into force of customs tariffs on Chinese and Vietnamese imports of upholstered furniture. leather and “motion”, a category which includes electric reclining chairs. The federal agency then ruled that these imports were subject to “dumping” and benefited from “subsidies” in their country of origin, thus exercising “unfair competition” against Canadian companies.
“These tariffs are still in effect, and it has been a nightmare scenario for all importers to deal with,” says Matthew Fischel, vice-president of Structube. He estimates that these tariffs have increased the price of sofas in his stores by 20% to 30%.
Same story at Mobilia. Johannes Kau, president of the Montreal-based company, explains that he had to collect a bill of “several hundred thousand dollars” with the entry into force of these customs tariffs, which exceed 200% in some cases.
Today, the prospect of new tariffs – and therefore new price increases – is on the horizon. At least that’s what a letter sent last November by the Canadian Home Furnishings Alliance (CHFA) to industry partners suggests. In this letter, of which The duty obtained a copy, the group of Canadian furniture manufacturers, based in Ontario, explains that it has filed a complaint with the CBSA for unfair competition. If he wins his case, he estimates that the federal agency could start collecting additional customs tariffs as early as next May.
According to this letter, the request this time concerns furniture upholstered in fabric. The leader of the group and signatory of the letter, Murray Vaughan, declined our interview request.
The CBSA, for its part, indicated that it was not able to publicly discuss the filing of a complaint, “in accordance with international agreements and in order not to disrupt normal international trade.”
It’s up to consumers to pay the bill
There is currently a climate of uncertainty among importers. “We still don’t know if it’s going to go ahead. But it worries us, because of our experience with the first prices in 2021,” relates Matthew Fischel, from Structube.
Like him, Mr. Kau, from Mobilia, deplores the lack of predictability. “We fear that it is a timing excessively tight, like the first time. We had products that were already on order, already on their way. We couldn’t cancel them. These were products that we had sold to customers,” he explains.
Ultimately, “the biggest loser is the consumer, because they are the ones who pay for the additional costs,” argues Mr. Fischel. “It’s deplorable, because I believe that the Canadian consumer has the right to have access to the international market, to have access to a diversified product offering… And I believe that he pays too much for a sofa produced in Canada, because there is not the same level of innovation here as in Asia,” he argues.
Since the pandemic, in Canada, the price of upholstered furniture has increased at a faster rate than the overall cost of living. Between January 2020 and December 2023, Statistics Canada’s Consumer Price Index (CPI) increased by approximately 16%. The price of upholstered furniture, for its part, increased by 24%.
Among the factors that contributed to this recent increase in prices during the pandemic: tariffs, but also the increase in the price of containers. In 2021, when customs fees were introduced on Chinese and Vietnamese imports, the price of containers reached record levels. They had gone from less than $2,000 for a 40-foot container before the pandemic to more than $10,000 at the height of the crisis, in September 2021, according to the Drewry Global Container Price Index.
Recently, container prices have started to rise again due to disruptions to commercial shipping in the Red Sea. The average price of a container, which had returned to its pre-pandemic level, now stands at around $4,000, according to the Drewry index.
Save a local industry
From Alma, in Saguenay–Lac-Saint-Jean, François Émond, president of the Meubles Gilles Émond store, believes that the imposition of tariffs on Chinese and Vietnamese imports is justified. “There are much fewer Quebec and Canadian companies that produce furniture than before,” he points out. “This is largely due to the fact that people want to buy as cheaply as possible, without finding out where the products come from. »
This crumbling of the local industry is precisely what the Canadian group of furniture manufacturers behind this request for customs fees fears.
In its letter to the government, CHFA writes that “by 2022, China and Vietnam have surpassed Canadian manufacturers as the largest source of domestic fabric seating in Canada.” The market share of Canadian manufacturers has fallen by 11%, he says, adding that tariffs “would help bring back a lot of those lost sales to Canadian manufacturers.”
In François Émond’s store, almost all of the furniture sold is produced locally, emphasizes the merchant. The 2021 tariffs made it possible to “give breathing space” to local furniture manufacturers by reestablishing “fairer rules” for competition, he believes.
The CEO of the Association of Furniture Manufacturers of Quebec, Gilles Pelletier, agrees. “A manufacturer cannot sell his products in another country at a lower price than he would sell them at home: it’s as simple as that. It’s dumping and it’s illegal,” he emphasizes.
In the case of the new tariff request, however, we must wait for the Canadian border agency to carry out its investigation, notes Mr. Pelletier. If it proves that the trade practices of China and Vietnam are indeed unfair, new tariffs would then be “completely” legitimate, he believes.