“Negotiated trade agreements that protect US manufacturing and interests, while allowing for fair and balanced trade, should guide US trade policy. Trade agreements give countries and companies strict rules to abide by and provide certainty in business transactions, while addressing trade inequities and the deficit long term. This administration has signalled an interest in revisiting our current trade agreements, and tariffs are being used as leverage to help advance those goals.”
If industry learnt anything from President Trump’s first term in office, she said, it is that this administration strongly believes in using tariffs as a tool. This is not just for trade-related issues, but to negotiate on unrelated issues as well.
During his first term, China started to export mattresses via other Asian countries to avoid tariffs, for example. But Keane points to antidumping and countervailing duties that have already been imposed by the Department of Commerce on several additional countries exporting mattresses beyond just China. She said that monitoring and enforcement of those duties should be enhanced to prevent circumvention and duty evasion.
“Under the first Trump administration and continuing with President Biden, duties were imposed on mattresses coming from China and then subsequently other countries deemed circumventing those Chinese duties,” she said. “Those duties were imposed by the US Department of Commerce and US International Trade Commission after lengthy investigations.”
Mattress imports
The US is the largest importer of mattresses is the US, followed at some distance by Germany, Japan and France. US imports of mattresses in 2021 were 12% below 2020, but increased again in 2022 by 12%. Almost one half of US imports in 2022 were from Asia. Restrictive trade measures imposed by the US on the imported mattresses, first from China and then other export-oriented countries (Cambodia, Indonesia, Malaysia, Serbia, Thailand, Turkey and Vietnam, starting from 2021), impacted – and are still impacting – trade flows and manufacturers’ strategies in terms of competitive advantages and production relocation.
“If imported components are assessed additional tariffs, that will be an additional wrinkle in enforcement,” Keane said. “Indonesia is another exporting country that currently is not subject to those duties, but we are seeing a lot of production and exports from it.”
The largest mattress manufacturing industry is still China, including production by US companies within the country. The sector there increased from US$9bn in 2017 to $9.9bn in 2018, before decreasing in 2019 and 2020. In 2021, the increase in production was substantial, reaching $10.9bn. China’s production decreased in 2022, primarily because of the Covid-19 pandemic, with the value of US mattress shipments that year (including exports) only reaching $8.5bn. Other major manufacturing countries include India, Poland, Brazil and the UK.
Keane is not anticipating any stockpiling in light of impending tariffs, as she said this would likely have already happened. “Regardless of the uncertainty on the type of goods and the countries, the administration has signalled from the beginning that tariffs would be the priority tool in their toolbox,” she said. “Whatever the new tariffs announced this week, the administration will most likely not give businesses enough time for stockpiling or long-term planning. Businesses are going to have to be reactionary and agile, which is challenging for most major corporations with long standing partners in the supply chain.”
Here, she says, it is extremely difficult to quickly change suppliers and sources for components as many of these contracts can have six to 18-month sourcing clauses. In addition, a change in supplier could mean a different production process and product offering, which is not something businesses take on lightly. “How much relocation and onshoring will happen when it is a capital-intensive process at a time when capital is expensive and in four years a different administration may have a different approach?” she said.
For those companies already doing business in and sourcing exclusively from the US, she believes they will be in a better position to control costs and supply chain disruptions, at least in the short term. “As others may pivot to the same US sources longer-term, they may also see disruption and costs increases due to market demand,” she said. “Of course, this could also lead to greater investment in the US to meet that demand.”
