KUALA LUMPUR: The United States’ latest tariff probe could severely impact Malaysia’s furniture exports, which relies heavily on American market demand, a major industry body warns.
The Federation of Malaysian Manufacturing (FMM) said the possible imposition of extra tariffs on furniture imports may lead to order reductions, tighter margins and greater pressure from US buyers to cut prices.
FMM president Tan Sri Soh Thian Lai said furniture exports stood at RM7.03 billion last year, representing 3.5 per cent of Malaysia’s total exports to the US.
This makes the US by far the single largest market for Malaysian furniture makers.
“Any increased tariff barrier would therefore have a direct and significant impact on an industry that is already operating under tight margins and competing against lower-cost producers in the region,” he told Business Times.
President Donald Trump said on Friday his administration would conduct a “major” tariff investigation on furniture entering the US, a step toward imposing higher duties on a sector already seeing tariff-fuelled price increases.
The investigation would be completed within the next 50 days.
According to Soh, the risks for Malaysian furniture makers are particularly pronounced if increased tariff barriers prompt US buyers to source domestically or shift orders to competing countries.
He said the US currently imports over 60 per cent of Malaysia’s furniture exports, meaning even a moderate tariff could significantly alter buyer behaviour.
“FMM’s ongoing survey on the potential impact of the US tariffs, which covers a broad base of exporters across sectors, indicates that many companies expect order reductions, tighter margins and greater pressure from US buyers to cut prices or absorb costs should tariffs rise to as high as 19 per cent.
“For SMEs in the furniture sector, the risk is compounded by limited ability to absorb additional costs or secure access to new markets, leaving them especially vulnerable to order diversion and price pressures,” he added.
As such, Soh said the federation urges the government to strengthen and broaden its response for the furniture industry through several additional measures.
He noted that free trade agreements and preferential trade agreements should be expanded and fast-tracked to secure wider tariff concessions, particularly with emerging markets in Africa, Latin America and the Middle East, which hold strong potential for furniture demand.
He added that these agreements should be accompanied by technical support to ensure furniture exporters can fully utilise the preferential benefits.
This includes guidance on Rules of Origin compliance and tariff scheduling.
He also said targeted export support mechanisms for the furniture sector should be enhanced, including the reinstatement of the brand promotion grant and removal of administrative fees for association-led trade missions under Matrade’s market development grant.
In addition, he called for the provision of direct financial assistance for SMEs participating in international furniture exhibitions, design showcases and buyer engagement programmes.
FMM, he said, recommends the establishment of a dedicated national export resilience fund to help furniture manufacturers offset adjustment costs such as product redesign, testing, certification, repackaging and marketing required to penetrate new markets.
He said complementary to this, the government should offer fiscal incentives or double deductions for companies undertaking market diversification and supply chain realignment including the relocation of distribution hubs and the formation of logistics partnerships overseas to serve buyers more effectively.
“These initiatives are vital to ensure that Malaysian furniture exporters remain competitive, protect jobs, and strengthen Malaysia’s global furniture footprint despite increased tariff barriers,” he added.
© New Straits Times Press (M) Bhd
