This article is produced with this disclaimer: I am not an economist, nor do I play one on television. But speaking of television, a recent furniture ad caught my attention: First, it was because my wife and I are in the market for a sofa, kitchen table, and a few other things. But second, the message was that we should buy now, because tariffs on Chinese goods will increase in January 2019. Furthermore, the retailer went on to say that most of its furniture is made domestically, but most of the parts do indeed come from China. I thought perhaps it was slick marketing, but articles from Curbed.com, Yahoo News, The Boston Globe and many others cite the specific impact on furniture makers.Tariffs on Chinese goods will increase in January—what does that mean for the local business economy in New England? Click To Tweet
But of course, furniture makers are not alone. Rick Lord, CEO of the Associated Industries of Massachusetts (AIM), points out that his member companies can’t easily change their supply chains and may face tougher competition from overseas rivals as a result of tariffs. The extra costs on material and components will limit new hires, pare back raises, or result in layoffs. (See the Boston Globe article Trade talks weigh heavily on Mass. Companies to learn more.)
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Another Massachusetts industry affected is the $1.4 billion cranberry industry. China’s response to recent U.S. tariffs is to levy a 40 percent tariff on an industry that already suffers from a profound oversupply this year. Recent marketing efforts by U.S. cranberry companies in China have created demand, but given that a Chinese retaliatory tariff does not apply in Canada, it would appear these initiatives will benefit the Canadian cranberry industry. There is more to the story, as a recent editorial in the Boston Globe attests.
Given the upcoming increase, imports from Asia have increased dramatically recently. American Trucking Association Chief Economist Bob Costello stated recently, “After slowing at the end of the third quarter, truck freight surged in October.” A short term bump, but what will the long term impact be? I will leave that one for the real economists.
For now, the business community needs to be aware of the industries that will be affected as more than $200 billion worth of Chinese goods will be affected. A good summary can be found in the article, Trump Just announced tariffs on another $200 billion worth of Chinese goods. Here are all the products that will get hit.
And, much closer to home–mine to be exact–we ponied up and bought the furniture.