The Canadian Kitchen Cabinet Association is appreciative of the decision by U.S. President Donald Trump to delay the planned tariff increases on furniture, cabinets, and vanities. However, the industry continues to face significant challenges due to the existing tariffs imposed by Trump. The sector was hit with 25 per cent tariffs in October, with a proposed increase to 30 per cent for upholstered furniture and 50 per cent for cabinets and vanities, which was scheduled to go into effect on January 1.
Luke Elias, the vice-president of the association, expressed that while the postponement to 50 per cent is somewhat relieving, the industry is still struggling with the impact of the initial 25 per cent tariffs. The kitchen cabinet manufacturing industry in Canada, valued at $4.7 billion, exports around $600 million worth of products annually. The additional tariffs have added to the challenges faced by the industry, which was already coping with a subdued Canadian housing market.
Ralph Fehr, the president of Manitoba-based Elias Woodwork, highlighted the detrimental effects of the tariffs on his company, which employs over 400 individuals and exports the majority of its products to the U.S. While the 25 per cent tariffs have been damaging, a 50 per cent duty would have been catastrophic, Fehr emphasized. The company utilizes American materials, like hardwood lumber from the Appalachians, in its production processes before selling the finished products in the United States.
Fehr expressed hope that the Canadian government would advocate for the industry in negotiations with the U.S. to reach a mutually beneficial agreement. The tariffs have significantly impacted the company’s profitability, prompting them to focus on cost-cutting measures to navigate through the challenging period. Layoffs have been witnessed in the industry since the tariffs were initiated, with multiple companies foreseeing job losses in the near future.
Looking ahead, the association is calling for continued support from the government, urging for the extension of procurement policies to encompass all incentives for the building industry. Addressing the issue of parts imports being undervalued and subsequently sold as Canadian products in the U.S. market is crucial. The American Kitchen Cabinet Alliance has accused Canada and Mexico of circumventing trade measures imposed on Chinese imports.
As discussions around the CUSMA review unfold, the industry is hopeful that its concerns will be addressed and not overshadowed by higher-profile tariff matters. The association stresses the importance of recognizing the significant impact of the tariffs on the cabinet and furniture sector, which employs over 25,000 Canadians across 3,500 companies.
Trump’s rationale for the furniture tariffs is to safeguard American industry and national security, a stance that has prompted efforts to strengthen rules-of-origin requirements in the upcoming CUSMA negotiations. The industry is bracing for potentially tense discussions, with Trump signaling a willingness to withdraw from the trade pact if necessary. Despite efforts by Ottawa to seek relief from the sectoral duties, trade talks were halted following a dispute over tariffs, leaving the industry in uncertainty as the review of CUSMA approaches.