Vaughan-Bassett sees strong domestic demand despite China tariff easing

Monday’s announcement that China and the U.S. would significantly ease levies as they attempt to ratchet down trade tensions that have roiled global markets may have been a light at the end of the tunnel for some in the furniture industry, but one U.S. case goods manufacturer sees lingering questions that remain to be answered about downsides in other major sourcing regions.

Doug Bassett, president of Galax-based Vaughan-Bassett Furniture, said the recent developments and the ongoing uncertainty around trade are having a positive impact on the company’s business because it lacks much direct exposure to China in their supply chain.

“We’re primarily a bedroom company, and very little bedroom comes out of China,” Bassett told Furniture Today following the announcement. “Only about 5% of the bedroom imports to the United States come from China. Fifty-five percent come from Vietnam, and another 12% come from Malaysia.”

Bassett likened the development to a similar move from the administration roughly a month ago. “This is not unlike what was announced with the 90-day extension and the time for negotiation and the reduction in the tariff during that period,” he observed.

At the recent High Point Market, Bassett said uncertainty around tariffs led many buyers to lean on the company as a source of stability amid a chaotic business environment. “There’s so much uncertainty, there’s so much risk, and our attendance was through the roof,” he said. “Many dealers indicated to us they wanted to reduce their exposure and reduce their risk by carrying more of our American-made product.”

“I don’t think this announcement with China [Monday] changes much,” he continued. “There’s still great uncertainty surrounding where the tariffs are going to end up — with China, with Vietnam, with Malaysia and so on, so until actual agreements are reached, there’s significant risk and uncertainty to all import programs.”

As for Vaughan-Bassett’s own exposure to China, Bassett said it’s limited. “We have very little exposure to China,” he said. “We have a handful of components, primarily our hardware, and I believe our drawer guides are sourced in China. So those are the two main components that we’re keeping an eye on.”

He added that the company prepared in advance of the original tariff hikes.

“I know that my brother and our purchasing guys loaded up with components prior to the original tariffs being announced so that we would have some cushion,” Bassett explained.  “That’s a minor calculation for us in the grand scheme of things. We’re much more focused on the opportunity presented by the threat of high tariffs on all these exporters to the United States.”