China-US Trade Tensions: Hiked tariffs could force furniture stores out of business
Updated 13:10, 26-May-2019
[]
03:14
As the US continues to target Chinese companies, American businesses too are bearing the brunt of its own government's decisions. One big example is of the American furniture industry. Retailers like American Furniture Warehouse have moved some of its manufacturing to places like Vietnam to keep costs down. But some of its goods are still made in China. And that may be hard to change. CGTN's Hendrik Sybrandy reports from the US state of Colorado.
American Furniture Warehouse is one of Colorado's largest retailers. Its founder says he aims to provide value to his customers. He's also a big free trader.
JAKE JABS AMERICAN FURNITURE WAREHOUSE CEO "I think there should be no tariffs on anything."
88-year-old Jake Jabs has owned this business for exactly half his lifetime.
"When I bought the old American Furniture company, I put every penny I had into it. And I thought it'd be successful. But I never dreamed we'd go this far."
He never dreamed a trade dispute would go this far either.
JAKE JABS AMERICAN FURNITURE WAREHOUSE CEO "I think it's ridiculous."
Tariffs were all the talk at this year's World Trade Day Denver, a global business conference.
LOU LONGO PLANTE MORAN GLOBAL SERVICES PARTNER "This latest round, these are levels that are unprecedented."
Lou Longo does consulting work for various companies that are scrambling to deal with the current trade environment.
LOU LONGO PLANTE MORAN GLOBAL SERVICES PARTNER "I have Chinese-based clients, I have U.S.-based clients, I have European and other clients that are all impacted and in various ways."
He says Chinese exporters and U.S. importers of products largely shared the milder pain of past U.S. tariffs. The newly announced 10 to 25 percent increase in duties on $200 billion worth of Chinese imports could be a different story.
JAKE JABS AMERICAN FURNITURE WAREHOUSE CEO "That changes the game because at 25 percent they can't eat it, we can't eat it. We're going to have to raise our prices, and that's what's sad. The consumer is the one that loses."
To keep costs down, companies like American Furniture have moved lots of manufacturing to places like Vietnam. But five to six percent of its goods, often accessory items and those with more components, are still made in China. And that may be hard to change.
TONY MITCHELL GLOBAL IMPORT DIRECTOR, AMERICAN FURNITURE WAREHOUSE "The factories in China have scale, they're huge, they can move the material, and they can deliver on time. That's a problem when you start moving things around to unknown areas."
Tony Mitchell, the head of global imports, says it takes business away from those manufacturers.
TONY MITCHELL GLOBAL IMPORT DIRECTOR, AMERICAN FURNITURE  "And there is risk the factory might not be there if you want to come back and go back to China, your original source."
HENDRIK SYBRANDY THORNTON "It's not the first time Jabs has had to deal with this issue. Back in 2005, the U.S. charged China with dumping wooden bedroom furniture in this country at unfairly low prices and imposed steep import tariffs on the furniture as a result."
Jabs fought unsuccessfully against those duties. This veteran of past price wars.
Expects his furniture prices to go up in a few months if nothing changes. That goes against his grain.
JAKE JABS AMERICAN FURNITURE WAREHOUSE CEO "We're the biggest consumer of goods in the world, we should be the leader of free trade."
JAKE JABS AMERICAN FURNITURE WAREHOUSE CEO "Hopefully, cooler heads will come to the table, and hopefully, the tariffs will go away."
Jabs' fingers are crossed. Hendrik Sybrandy, CGTN, Denver.