What happened: Burnaby sofa-maker Stylus has cancelled all U.S.-bound shipments of its imported sofa beds.
Why it matters: The products, which include mattresses made in China, are subject to a 1,732% American anti-dumping duty. It’s a local example of how the U.S.-China trade war is impacting businesses the world over.
Preliminary U.S. anti-dumping duties on Chinese mattresses have priced the imported products of one local manufacturer right out of the U.S. market.
“I think we calculated it was over $113,000 for a tariff on a sofa bed,” explained Jason Harris, vice-president of sales and marketing at Stylus, a Burnaby-based sofa manufacturer.
The product would normally cost around $600-$650.
“It’s ridiculous, obviously,” he says.
On May 29, the U.S. Department of Commerce announced dumping rates of between 34% and 75% on products from Chinese manufacturers named in its bulletin.
All others were saddled with an astronomical rate of nearly 1,732%.
“If you have a Chinese mattress and you put it into your product – the way that the memo’s written – the tariff goes on the entire amount,” said Harris. “Because we’re not one of those named manufacturers in China, because we’re adding it to our product, we have to pay the higher price.”
Stylus issued a memo to customers that, effective immediately, the company would no longer be shipping imported sofa beds south of the border.
While the company generally shipped such product weekly, Harris says it can sell what it has to the Canadian market instead. For U.S. sales of beds built in Canada with mattresses from China, the company has secured Delta’s A-Z Foam Ltd. as a supplier at a slightly higher cost, which Harris says Stylus will absorb.
Of greater concern, says Harris, is whether the Canadian government will follow America’s lead.
“We have heard that Canada may follow suit with their own tariffs, so if that happens, that’s going to have a much larger effect,” he said, adding that the company would most likely explore a new source for sofa mattresses. No such tariffs have been officially confirmed.
Fully imported sofa beds are just a part of Stylus’s business. Its bread-and-butter comes from made-to-order, made-in-Canada products, which by nature are less exposed to U.S.-China trade actions, and can, in fact, benefit from them.
While Stylus can no longer export its imported sofa beds to the U.S., Harris says the company can sometimes avoid a 25% tariff on fabrics that U.S. counterparts do have to pay when importing from China.
“In some cases, it makes us more competitive.”
When asked whether Stylus will win, lose or break even at the end of the day in the current trade environment, Harris was optimistic.
“I feel like overall our business may come out ahead. But our business is broken down into divisions and certain divisions are really going to lose hard. Others will come out ahead,” he explained, pointing out the company’s core Canada-based business is bigger than its import division.
“Overall we’ll probably pick up more there than we’ll lose on the other.”
The United States’ Department of Commerce is scheduled to announce a final decision on mattress anti-dumping duties on or around October 11, 2019.