More Money For Your Mattress

by Cord Blomquist on January 3, 2009 · 7 comments

in Features, Politics as Usual, Trade

Leggett & Platt, an American innerspring manufacturer, has been busy lobbying the Department of Commerce.  The fruit of their labor: a tariff of anywhere from 164.75% to 234.51% on innersprings from China, their biggest competition.

This tariff means that you can expect to pay double for your next mattress.  Because innersprings are the most expensive part of traditional mattresses and the tariff has effectively removed affordable, low-priced mattresses from the market.

This is the result of a petition to the International Trade Commission filed in December of 2007 by Leggett & Platt—a Fortune 500 company based in Carthage, Missouri.  The petition started an investigation into alleged “dumping” by several Chinese spring makers.

For those not familiar with the doublespeak of trade policy, “dumping” refers to the act of shipping large amounts of a product into a foreign market at well below current market prices.  This seems like a good thing for mattress makers as well as consumers who buy mattresses.  Others disagree, namely Leggett & Platt.

The folks at Leggett & Platt argue that laws like these are necessary to protect American manufacturers (namely themselves)  from unfair competition from abroad.  But, rather than protecting American businesses, this policy is killing them.

Small mattress makers—think obnoxious ads on your local televisions stations—add padding, memory foams, lovely flower print coverings and other components to innersprings to make a finished mattress.  These small to medium sized businesses are paying a steep price for Leggett’s “protection.”

Leggett was already responsible for 70 to 80 percent of the domestic innersprings market.  Without foreign competition, they now have a virtual monopoly on the market.  In short, mattress makers are now forced to buy from Leggett at any price they set.

This means many mattress makers have discontinued discount mattress lines.   Almost all have had to raise their prices in order to pay for Leggett’s high-priced product.

Many small mattress makers relied on foreign sources of innersprings in order to compete with their larger competitors. This new tariff means that’s no longer an option, so  many small mattress makers maybe forced to close their doors.

Those with a dark sense of humor may chuckle at the regulatory underpinnings of this tariff.  The DOC has the authority to investigate dumping and enact such anti-dumping tariffs under Title VII of the Tariff Act of 1930, otherwise known as the Smoot-Hawley Tariff Act.  Under Smoot-Hawley, exports and imports plunged by over 50 percent, from their high in 1929 to the depressed levels of 1932.  Most economists agree that this policy was one of the major catalysts that led to the start of the Great Depression.

Smoot-Hawley has, thankfully, been reformed several times in the decades since those dark days.  But, thanks to companies like Leggett & Platt, who manipulate trade policy to avoid competition, Smott-Hawley is being put back together piece by piece.

But don’t lose any sleep over it; after all, you paid so much for that mattress.

Full disclosure: The author worked for Leggett & Platt as a shipping clerk for a summer in college .  It was a great job.

Gene January 4, 2009 at 1:43 am

You're screwed either way. Buy a foam mattress.

Ted Frank January 4, 2009 at 2:58 am

It's the Department of Commerce, not the FTC.

cordblomquist January 4, 2009 at 6:44 am

I've corrected the text to reflect that it was, in fact, the Department of Commerce. The FTC and the International Trade Commission have been involved in such actions as well.

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