Ikea May Tackle $30 Billion Furniture Tariff Spat With Price Rises — Panjiva
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Ikea May Tackle $30 Billion Furniture Tariff Spat With Price Rises

China 1762 Cons. Discr. - Durables 109 Tariffs 1175 U.S. 3310

The expansion of the trade war between China and the U.S. is steadily spreading into consumer products. One of the largest product groups covered by the most recent extension in American duties on Chinese exports, outlined in Panjiva research of September 18, is furniture. Imports worth $29.5 billion, Panjiva analysis shows, will be hit with additional duties of 10% from September 24 with a further 15% point increase promised for January.

The challenge for importers will lie in determining whether to raise prices for customers or update their supply chains. That will be a function of the availability of alternative supplies. The largest targets include metal office furniture ($3.8 billion of imports in the 12 months to July 31) where China accounted for 70.2% of supplies.

A lack of alternatives make price rises more likely. Imports of wooden non-chair furniture from China worth $2.77 billion represents 45.7% of imports, suggesting alternatives may be available instead of price rises.

CONSUMERS MAY HAVE TO STAND FOR TARIFF-DRIVEN PRICE RISES

Chart segments U.S. imports of furniture from China that are targeted for 10% duties by product (HS-8) in the 12 months to July 31.    Source: Panjiva

Furniture retailer Ikea appears set to use price increases rather than stockpiling as an initial reaction to duties. Panjiva data shows its U.S. imports from China actually fell 31.9% in August after rising by just 7.2% on a year earlier in August. That compares total U.S. imports by the company that fell 23.4% in August after a 9.5% increase in the prior three months.

SWEDISH COMPANY, NOT SWEDISH FURNITURE

Chart segments U.S. seaborne imports of furniture by Ikea according to origin.    Source: Panjiva

The extent of Ikea’s “China problem” shouldn’t be overstated though. Imports from China represented 29.0% of the total in the past 12 months. Leading imports from there could be sourced from other existing suppliers including bent-wood furniture (38.4% of China imports, with Poland an alternative) though metal furniture (non-office) would be more of a challenge (22.9% with only minor imports from other countries currently).

IKEA’S CHINA PROBLEM CAN BE OFFSET FOR MOST PRODUCTS

Chart segments U.S. seaborne imports of furniture by Ikea according to origin and product (HS-6) in the 12 months to August 31, denominated in TEUs.    Source: Panjiva

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