70% of finished product exports to the United States are impacted by tariffs, Singapore's furniture industry profits under pressure | Lianhe Zaobao
The United States has imposed tariffs on over 400 products containing steel and aluminum, affecting multiple industries including furniture. Singaporean furniture manufacturers are feeling the impact of the tariffs and are concerned about further squeezing profit margins. The U.S. Department of Commerce announced the addition of 407 products to the tariff list, with any product containing steel and aluminum components subject to an additional 50% tariff. The rapid implementation of this policy has put cross-border trade in a difficult position, leaving logistics companies and cargo owners feeling overwhelmed. Singaporean furniture manufacturer Koda stated that approximately 70% of its finished products are exported to the United States, and the tariffs have a significant impact on them
The United States has imposed tariffs on more than 400 types of products containing steel and aluminum, including furniture, bulldozers, compressors, and wind turbines. Singaporean furniture manufacturers have already felt the impact of these tariffs, and the new round of tariffs has raised concerns about further squeezing their profit margins.
On Tuesday (August 19), the U.S. Department of Commerce announced the addition of 407 product categories to the tariff list for steel and aluminum derivatives. In addition to imposing individual country rates on non-steel and non-aluminum components, any steel and aluminum components in these products will incur an additional 50% tariff.
This round of tariffs covers a wide range of products and is being implemented quickly, leaving freight companies, cargo owners, and intermediaries involved in cross-border trade at a loss.
Brian Baldwin, Vice President of U.S. Customs at logistics giant Kuehne + Nagel International AG, stated in a LinkedIn post: "Basically, anything shiny, metallic, or somewhat related to steel or aluminum is likely to be on the list."
Baldwin pointed out that this is not just a simple addition of tariffs but a strategic change in the regulatory approach to steel and aluminum derivative products.
Since Trump announced reciprocal tariffs on April 2, global supply chains have been thrown into chaos, and Singaporean companies have not been spared.
Customers Require Furniture Manufacturers to Share Tariff Burden
Koda's Executive Director, Xu Zhien, revealed in an interview with Lianhe Zaobao that about 70% of the finished products manufactured by the company are exported to the United States, making the U.S. tariffs significantly impactful for him.
He said, "Since the company has factories in Vietnam, in addition to paying tariffs on steel and aluminum, we also have to pay a 20% import tariff."
Extended Reading
The U.S. Expands Steel and Aluminum Tax Coverage, 407 Types of Derivatives Also Subject to 50% Tariff U.S. Exports Plummet Over 40%, July Non-Oil Domestic Exports Down 4.6%, Falling Short of Expectations So far, five or six major American clients have inquired with the company, asking for the metal weight in the products and the applicable tariffs. If the metal content is low, these clients generally do not mind paying, but if it is iron furniture, they will require manufacturers to share the tariff burden.
Additionally, the trade agreement between the United States and Vietnam stipulates a 20% tariff on Vietnamese goods, but a 40% tariff on Chinese goods transshipped through Vietnam. The U.S. imposes stricter tariffs on transshipped goods, but it is currently unclear how these tariffs will be handled, creating uncertainty for businesses.
Xu Zhuxian, President of the Singapore Furniture Industry Council and CEO of Commune Lifestyle, stated in an interview that furniture manufacturers with factories in Malaysia and Vietnam exporting products to the U.S. are facing significant impacts. Although their order performance is strong, the clients' request to share the tariffs will definitely further squeeze profits.
Avoiding tariffs by redirecting products at low prices affects various consumer sectors
Moreover, businesses have reported that some manufacturers who originally exported products to the U.S. are now redirecting excess products to the region at low prices to avoid tariffs. The affected products span various consumer sectors, including clothing and furniture.
Xu Zhuxian pointed out that some Chinese furniture manufacturers are selling directly to Singapore consumers through Taobao at factory direct prices, bypassing the entire retail supply chain, which impacts local retailers. The prices of these products may be more than 50% cheaper than those sold locally.
In ASEAN, the U.S. imports $2.2 billion (2.1%) of steel and aluminum from Vietnam, followed by Thailand ($1.9 billion), Malaysia ($500 million), and Indonesia ($400 million).
Hu Shengjin, former president of the Singapore Hardware Machinery Association, stated in an interview that Singapore's export volume of steel and aluminum to the U.S. is not significant. Additionally, local operating costs are high, and businesses have limited inventory of steel and aluminum products, which also reduces the impact of tariffs
