Stamford-based Lovesac to move most production out of China over trade war tariffs

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As trade wars continue between the United States and China, Lovesac is looking at where the company does production.

The furniture company, based in Stamford, plans to move 75% of its production out of China by 2020, according to CEO Shawn David Nelson. The production in China is subject to a 25% trade tariff.

"This is a huge disruption and certainly annoying," he said. "(And it) ultimately will cost our business millions and millions of dollars, which could have fallen directly to the bottom line."

Currently, 40% of Lovesac's manufacturing is done out of Vietnam and Malaysia, which is free of the tariff levels. Nelson says they always worked to diversify their supply chain to get out of China. The company hopes to have a long-term plan of moving production to the states.

The chair of economics and finance at Sacred Heart University, professor Khawaja Mamun, says tariffs are especially harmful for consumers.

"It adds benefits to some sectors who are being protected from this tariff, but mostly, it's not good for other sectors," he said.

Companies turn to foreign countries for cheaper labor and relaxed regulations because it's easier to produce, faster and cheaper, according to Mamun.

Surprisingly, Nelson says he believes the tariffs will ultimately help with long-term trade relationships.

"While I do support the ideas that we're trying to achieve there, it's been extremely disruptive, and frankly, had a huge impact on our stock price, and huge impact on the perception of our business," he said.

Lovesac uses yarn made from recycled water bottles to help make its products. Traditional manufacturing means it would cost two to three times what the company pay overseas, as they explore moving it back to United States. It would require technology and automation at levels that do not yet exist.

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