BIFMA, representing 165 business and institutional furniture manufacturers, and material/component part suppliers across the United States, submitted comments to the Office of United States Trade Representative (USTR) this morning in opposition to the Administration’s proposed 25% tariff on China sourced furniture and components/parts.
All comments, now over 1,300 that have been filed, are available for review at the USTR website: https://www.regulations.gov/docket?D=USTR-2018-0026
Furniture manufacturers are concerned and project that an increased cost in materials will have a negative impact on market demand, likely leading to a net job loss in this sector. Commercial furniture manufacturing in the United States is conducted in 48 states, driving an economic impact of nearly 15 billion dollars annually and spurring significant annual exports of 725 million dollars.
Foreign competitors who source component parts from China would not see price increases from tariffs like U.S. manufacturers would. Thus, when they export finished goods to the U.S., their cost basis would be more competitive than domestic U.S. manufacturers. This, coupled with the strong U.S. dollar, would put domestic manufacturers in a very disadvantageous position in the U.S. market.
More than 62,000 U.S. workers are involved in the manufacturing of commercial furniture and over 1,200 commercial furniture establishments (with nearly $3 billion in payroll annually) serve both the domestic and international demand for the industry’s products. Thousands of U.S. based jobs involved in producing commercial furniture exported to other countries will be at risk.
U.S. manufacturers must be competitive in both the U.S. marketplace and international marketplace to achieve long term success. BIFMA and its members encourage the Administration to reconsider an imposition of tariffs. Taxing goods and materials coming into the United States carries a high probability of unintended consequences in today’s globally interconnected manufacturing process.
Copy of the letter from Executive Director Thomas Reardon to the Office of United States Trade Representative (USTR):
August 17, 2018
The Honorable Robert E. Lighthizer
United States Trade Representative
Office of the US Trade Representative
600 17th Street, N.W.
Washington, D.C. 20508
Re: Docket Number USTR-2018-0026 – Request for Comments Concerning Proposed Modification of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation
Dear Ambassador Lighthizer:
BIFMA is the trade association representing 165 business and institutional furniture manufacturers, and material/component part suppliers across the United States. We write today with deep concerns about the Administration’s proposed 25% tariff on China sourced furniture and components/parts.
We project the increased materials cost will have a negative impact on market demand, likely leading to a net job loss in this sector. Commercial furniture manufacturing in the United States is conducted in 48 states, primarily Michigan, Indiana, California, Wisconsin, North Carolina, Texas, Pennsylvania, New York, Iowa, and Ohio.
Foreign competitors who source component parts from China would not see price increases from tariffs like U.S. manufacturers would. Thus, when they (Canadian, Mexican, and European manufacturers specifically) export finished goods to the U.S., their cost basis would be more competitive than domestic U.S. manufacturers. This, coupled with the strong U.S. dollar would put foreign manufacturers in a very advantageous position in the U.S. market.
BIFMA members are concerned about many items on the list and expected cost increases of upstream commodities. Most importantly, Harmonized System (HS) subheadings of 9401.30 through 9401.90 and subheadings of 9403.10 through 9403.90 are of critical importance. BIFMA members affirm that these subheadings are not part of the technologies and products related to China’s “Made in China 2025” industrial policy program (the focus of the Section 301 tariffs). These HS subheadings include parts and finished goods that are manual labor intensive and require a skillful dexterity as opposed to technological innovation.
COMPONENTS/PARTS
Generally, most countries including the U.S. exclude tariffs from being placed on parts, even if the finished goods that the parts are used for are subject to Most Favored Nation (MFN) tariffs. The importation of parts implies that finished products will be made here in the United States.
• U.S. Manufacturers of commercial furniture drive an economic impact of nearly 15 billion dollars annually. (Source: 2016 U.S. Survey of Manufactures NAICS Codes, 337127 (institutional furniture), 337211 & 337214 (office furniture).
• U.S. Manufacturers of office furniture spur significant annual exports of $725 million (Source: 2017 ITC Trade Database)
• More than 62,000 U.S. workers are involved in the manufacturing of commercial furniture. (Source: 2016 U.S. Census Bureau)
• Over 1,200 commercial furniture establishments (with nearly $3 billion in payroll annually) serve both the domestic and international demand for the industry’s products. (Source: 2016 U.S. Census Bureau)
• Thousands of U.S. based jobs involved in producing commercial furniture exported to other countries will be at risk.
U.S. manufacturers must be competitive in both the U.S. marketplace and international marketplace to achieve long term success.
FINISHED GOODS
Placing tariffs on China-sourced finished commercial furniture products is problematic. • A scenario where tariffs are imposed on components but tariffs on finished goods are removed could result in an increase in manufacturing of finished goods in China, thus increasing foreign competition for some U.S. companies.
• If the U.S. were to place tariffs on finished goods it would invite retaliation by other countries to place or to increase tariffs on imports of furniture – maybe high general MFN tariffs, or possibly through the use of retaliatory tariffs aimed at only furniture made in the U.S. These new tariffs placed on finished furniture would price U.S. made furniture out of international markets.
BIFMA and its members encourage the Administration to reconsider an imposition of tariffs on the HS subheadings of 9401.30 through 9401.90 and subheadings of 9403.10 through 9403.90. Taxing goods and materials coming into the United States carries a high risk of unintended consequences in the globally interconnected manufacturing process today. We believe that diplomacy and trade negotiations are a better course of action to resolve trade imbalances as opposed to the implementation of tariffs.
Sincerely,
Thomas Reardon, Executive Director
Business and Institutional Furniture Manufacturers Association (BIFMA)
Cc: Peter Navarro, White House Assistant to the President, National Trade Council
Arthur Tsao, Assistant General Counsel, USTR
Justin Hoffmann, Director of Industrial Goods, USTR
Terry McCartin, Acting Assistant USTR for China
U.S. Department Commerce
Members of the U.S. Congress
Ryan Ong, National Association of Manufacturers
BIFMA Members
Harmonized System (HS) subheadings of 9401.30 through 9401.90 and subheadings of 9403.10 through 9403.90
(nesoi = Not Elsewhere Specified or Included)
9401.30.40 Seats nesoi, swivel w/variable height adjustment & w/wooden frame (o/than of heading 9402).
9401.30.80 Seats nesoi, swivel w/variable height adjustment & other than w/wooden frame (o/than of heading 9402).
9401.40.00 Seats nesoi, convertible into beds (o/than garden seats or camping equip.).
9401.52.00 Bamboo seats.
9401.53.00 Rattan seats.
9401.59.00 Seats nesoi, of cane, osier, similar materials o/than bamboo or rattan.
9401.61.20 Chairs nesoi, w/teak frames, upholstered.
9401.61.40 Chairs nesoi, w/wooden frames (o/than teak), upholstered.
9401.61.60 Seats (o/than chairs) nesoi, w/wooden frames, upholstered.
9401.69.20 Seats nesoi, of bent-wood.
9401.69.40 Chairs nesoi, w/teak frames, not upholstered.
9401.69.60 Chairs nesoi, w/wooden frames (o/than teak), not upholstered.
9401.69.80 Seats (o/than chairs) nesoi, w/wooden frames, not upholstered.
9401.71.00 Seats nesoi, w/metal frame (o/than of heading 9402), upholstered.
9401.79.00 Seats nesoi, w/metal frame (o/than of heading 9402), not upholstered.
9401.80.20 Seats nesoi, of reinforced or laminated plastics (o/than of heading 9402).
9401.80.40 Seats nesoi, of rubber or plastics (o/than of reinforced or laminated plastics & o/than of heading 9402).
9401.80.60 Seats nesoi, o/than of wood, or w/metal frame or of rubber or plastics (o/than of heading 9402).
9401.90.35 Parts of seats (o/than of 9402) nesoi, of rubber or plastics (o/than of heading 9402).
9401.90.40 Parts of seats (o/than of 9402) nesoi, of wood.
9401.90.50 Parts of seats (o/than of 9402) nesoi, o/than of cane etc, rubber or plastics or of wood.
9403.10.00 Furniture (o/than seats) of metal nesoi, of a kind used in offices.
9403.20.00 Furniture (o/than seats) of metal nesoi, o/than of a kind used in offices.
9403.30.40 Furniture (o/than seats) of bentwood nesoi, of a kind used in offices.
9403.30.80 Furniture (o/than seats) of wood (o/than bentwood) nesoi, of a kind used in offices.
9403.40.40 Furniture (o/than seats) of bent-wood nesoi, of a kind used in the kitchen.
9403.40.60 Furniture (o/than seats) of wood (o/than bentwood) nesoi, of a kind used in the kitchen & design. for motor vehicle use.
9403.40.90 Furniture (o/than seats) of wood (o/than bentwood) nesoi, of a kind used in the kitchen & not design. for motor vehicl. use.
9403.50.40 Furniture (o/than seats) of bentwood nesoi, of a kind used in the bedroom.
9403.50.60 Furniture (o/than seats) of wood (o/than bentwood), of a kind used in the bedroom & designed for motor vehicle use.
9403.50.90 Furniture (o/than seats) of wood (o/than bentwood), of a kind used in the bedroom & not designed for motor vehicle use.
9403.60.40 Furniture (o/than seats & o/than of 9402) of bentwood nesoi.
9403.60.80 Furniture (o/than seats & o/than of 9402) of wooden (o/than bentwood) nesoi.
9403.70.40 Furniture (o/than seats & o/than of 9402) of reinforced or laminated plastics nesoi.
9403.70.80 Furniture (o/than seats & o/than of 9402) of plastics (o/than reinforced or laminated) nesoi.
9403.82.00 Bamboo furniture and parts.
9403.83.00 Rattan furniture and parts.
9403.89.30 Furniture (o/than seats) of cane, osier, or similar materials o/than bamboo or rattan.
9403.89.60 Furniture (o/than seats & o/than of 9402) of materials nesoi.
9403.90.10 Parts of furniture (o/than seats), for furniture of a kind used for motor vehicles.
9403.90.25 Parts of furniture (o/than seats), of cane, osier, bamboo or similar materials.
9403.90.40 Parts of furniture (o/than seats or o/than of 9402), of reinforced or laminated plastics.
9403.90.50 Parts of furniture (o/than seats or o/than of 9402), of rubber or plastics (o/than reinforced or laminated plastics).
9403.90.60 Parts of furniture (o/than seats or o/than of 9402), of textile material (o/than cotton).
9403.90.70 Parts of furniture (o/than seats or o/than of 9402), of wood.
9403.90.80 Parts of furniture (o/than seats or o/than of 9402) nesoi.
About BIFMA
The Business and Institutional Furniture Manufacturers Association is the voice for the commercial furniture industry. BIFMA develops safety, performance, and sustainability standards that ensure product performance. BIFMA provides data and analytics that the industry uses to make key manufacturing decisions. The organization advocates for regulatory conditions that enhance value and foster innovation. BIFMA is the go-to resource providing tools commercial furniture manufactures need to ensure that products work. BIFMA adds to its leadership role with education and outreach initiatives that inform all stakeholders. This strong, uniquely equipped industry leader steps up with information, tools and insights that make us all smarter.