First Trust Advisors L.P. chief economist Brian Wesbury discusses whether Trump tariffs will impact inflation on ‘Varney & Co.’
President Donald Trump earlier this week promoted tariffs as a way to bring furniture-making manufacturing to North Carolina.
The president said Monday that he “used to go” to the Tar Heel State to “buy furniture for hotels” and that its furniture manufacturing business has “been wiped out.”
“That business all went to other countries, and now it’s all going to come back into North Carolina, the furniture manufacturing business,” he said.
President Donald Trump signs a series of executive orders in the Oval Office at the White House on Feb. 10. (Andrew Harnik/Getty Images / Getty Images)
Trump made the comment while discussing tariffs during an event about TSMC’s newly-announced plans to boost its investment in U.S. semiconductor manufacturing by $100 million.
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Tariffs on imports from Mexico, Canada and China came into force on Tuesday, slapping America’s northern and southern neighbors with a 25% levy. Imported goods from China, meanwhile, now have another 10% tariff on them, building upon a tariff of the same size that the Trump administration already imposed in early February.
Shannon Williams, the CEO of the Home Furnishings Association, told FOX Business in a statement that North Carolina “used to be a thriving hub for furniture manufacturing, using hardwoods from Appalachian” and that U.S. manufacturers “have shifted” elsewhere over time.
“I’ve spoken with the CEOs of the largest furniture manufacturers supplying the U.S., and none of them have communicated intent or plans to bring manufacturing or assembly back to the U.S., due to tariffs on raw materials, components, high labor costs, and a lack of employable workers,” she said.
According to Williams, some manufacturers are “planning on opening operations” in Canada to circumvent retaliatory tariffs and “serve the Canadian customers once served by U.S. operations,” while others are looking into shifting tariff-driven costs to consumers.
Canada placed retaliatory tariffs on a slew of furniture types, foods, apparel and other U.S. products starting March 4, while Mexico has indicated it was also planning retaliatory tariffs. China has already taken action in response to the U.S. tariffs.
“With hundreds of millions of manufacturing jobs in Asia, even shifting 30% of unemployed North Carolinians into manufacturing (of all kinds) would only fill less than 60k jobs. That’s less than .01% of the workforce needed,” the CEO of the Home Furnishings Association said.
Williams argued automation “is the only viable path to reshoring” but noted “few” furniture companies have been putting money into such technology.
Interior of furniture salon shopping room with sofas (iStock / iStock)
“There are concerns about what increased costs will do for consumer demand and how sustainable manufacturing can will be reduced demand,” she added. “One way or another, U.S. consumers need to brace themselves for higher costs – through higher labor costs for US production, tariffs on raw materials and, or price increases from products manufactured overseas.”
John Milikowsky, a domestic and international tax lawyer, told FOX Business that the tariffs could affect North Carolina’s furniture export industry.
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The state is home to over 800 furniture manufacturers. Its furniture manufacturing business exports over $250 million worth of goods each year, per the Economic Development Partnership of North Carolina.
It “relies on Canada because of the easy access to the border,” he explained, adding that furniture manufacturers in the state could face “significant challenges.”
“Tariffs could drive up costs, disrupt supply chains, and force high-end manufacturers to seek lower-cost materials, potentially impacting quality,” Milikowsky said.
“Larger furniture manufacturers have already begun shifting production away from China to mitigate tariff impacts, while smaller businesses will bear the brunt of rising costs,” he also said. “Without the ability to quickly relocate or adjust supply chains, these companies may face layoffs, downsize business, and suffer supply chain disruptions.”
Milikowksy described the tariffs as a “double-edged sword” for America’s furniture manufacturing industry.
“While tariffs incentivize more domestic furniture production and boost downstream industries like hardwood lumber, companies who invested in Chinese manufacturing operations will suffer with higher prices and these companies will have less of an ability to shift manufacturing to the U.S. or other countries with lower or no tariffs,” he told FOX Business. “They will need time to realign supply chains, shift production, and source materials from tariff-friendly regions – changes that could reshape the U.S. furniture industry in the long run.”
The U.S. global imports of furniture amounted to $32.4 billion in 2023, per a report published by Mann, Armistead and Epperson in February. Vietnam, China, Mexico, Canada, Italy, Indonesia, Malaysia, Taiwan, Thailand and India are among the top countries supplying it.
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Companies also source large amounts of materials needed to make furniture from other countries, according to CNBC.
The tariffs on imports from Canada and Mexico could also have an impact on home-building.
Construction workers build a single-family home in Westhampton Beach, New York, US, on Wednesday, May 22, 2024. The busiest travel season of the year is about to begin: almost 44 million people in the US are expected to unofficially kick off their su (Bing Guan/Bloomberg via Getty Images / Getty Images)
“Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices,” the National Association of Home Builders warned in early February.
Trump has indicated “reciprocal tariffs” are coming in early April.
