Rob Robertson, the owner of a furniture store in Richmond, B.C., is bracing for a pricey déja vu.
Two years ago, he was slapped with a sudden $60,000 bill after the federal government imposed new tariffs as high as 295 per cent on leather furnishings and recliners imported from China and Vietnam.
By the time he found out about the tariffs, he already had two containers on the water filled with customers’ orders.
“It was manageable,” said the owner of Q Living Furniture. “But rough.”
Now Robertson is worried it could happen again.
In a recent letter to industry partners, the Ontario-based Canadian Home Furnishings Alliance (CHFA) says it’s looking to trigger another similar tariff. It says it plans to submit a complaint to Canada Border Services Agency about Asian imports, namely from China and Vietnam.
This time, the alliance wants to the government to investigate what it sees as unfair trading of fabric seating like sofas and dining chairs.
Exporting items at prices below what they would sell for domestically is known as dumping under the Special Import Measures Act (SIMA), and it’s a contentious issue in international trade law. Tariffs are the tool relied on by governments to combat the issue.
If Robertson is suddenly hit with new duties again, he says he’ll be forced to raise prices.
“You can only absorb so much. The margins in furniture [are] very tight,” he says.
Robertson says about 40 per cent of his business relies on imports ranging from China to Finland. The remainder are Canadian-made products.
Imports, he says, tend to be less costly and meet the needs of consumers looking for lower price points.
Factories abroad are also able to produce more “unique looks” not found in Canada, he says.
He understands why the group of manufacturers wants to protect the industry but questions the impact on smaller retailers like himself and consumers.
Loss of variety
Major retailers like Montreal-based Structube, which owns 75 stores across the country, are also “very, very” concerned.
“Canadians deserve the right to buy, at the very least, a basic home furnishing — a sofa, if you will, at a reasonable price,” says the company’s vice-president Matthew Fischel.
When sourcing items, Fischel says they’ve found Canadian manufacturers are able to only offer a fraction of the different models provided internationally — items which better meet his brand’s style.
He says the enforcement measures under SIMA feel like a penalty for shopping outside of the country.
“It’s not for us … And you want to punish us because we want to look somewhere else,” says Fischel.
He questions whether the act is meeting the aims of protecting Canadian industry or just piling taxes on Canadian businesses.
The policy’s intent
Imposing tariffs does help protect Canadian industry, according to UBC business professor James Brander.
But he says he understands why retailers feel penalized even though it’s not the policy’s intent.
Consumers will also lose out if long-term tariffs are imposed, he says. Prices will go up.
“The prices of these Chinese and Vietnamese exports, it will be too high — they’ll just disappear,” he says.
Instead, Canadians will have to buy domestically made goods, which are typically higher-priced or products imported from the United States or Europe.
The CHFA and other members involved with the organization declined interviews with CBC News.
According to the alliance’s letter, if approved, the new tariffs could come into effect as soon as May of next year.