Home furnishings industry braces for ‘very significant’, long duration impact from tariffs| Exclusive survey

HIGH POINT — The latest round of tariffs proposed by President Donald Trump, which includes double-digit levies on many of the United States’ leading trading partners, will have a very significant impact on 70% of home furnishings-related businesses, according to an exclusive Strategic Insights survey.

The survey of more than 420 home furnishings retailers, manufacturer/suppliers, interior designers and industry allies, revealed few believe they will avoid the impact of tariffs, with another 23% saying it will be somewhat significant. Of the remaining 7%, just 1% said there will be no fallout.

Additionally, 69% of respondents view the tariffs as a long-term situation lasting six months or more. Among those within the 31% seeing a shorter-term duration for tariffs, some say there will be positive negotiations between the United States and other countries soon.

“I think you need to see how the POTUS will negotiate them down to a reasonable rate,” said one respondent. “He already said he’s open to negotiation. I believe it will work.”

“We predict negotiations will be finalized with new trade agreements before the tariffs have been in effect for 90 days,” was how one manufacturer/supplier views the situation.

Others agree negotiations will happen but not without some possible adverse outcomes.

“I believe this is a classic Trump-style negotiation tactic, and the tariffs likely won’t remain in their current form,” said one of those polled. “Countries like Vietnam will probably see the effective tariff rate drop from 46% to something closer to 10%.

“Hopefully, that happens sooner rather than later, but it’s a risky and aggressive approach, essentially trying to strong-arm other countries into making deals. I don’t think these tariffs can stay in place as-is; the economic fallout, both domestically and globally, would be too severe. My prediction is that we’ll start hearing about potential deals as early as (this) week.”

“Expect tariffs in China and the EU to be more permanent due to the politics underlying negotiations,” is the observation from a respondent. “Expect other countries to arrive at negotiated settlements during April.”

In the face of new tariffs, 27% plan to raise prices immediately, while nearly as many (26%) will hike prices only on new orders and new business. A little more than one-third (36%) are taking a wait-and-see approach to price increases.

Among those enacting or anticipating increases, 41% estimate they would hike prices by 11% to 20%, while another 28% forecast bumps of 21% to 30%. Meanwhile, nearly 14% would go as high as between 41% and 75%.

“We are dealers of many different lines and have been receiving emails of price increases happening as soon as immediately,” a survey taker noted. “It is going to cause our clients to pay more and will hurt our business.”

“I’m hoping small business owners can creatively sustain the price increases on products,” was another response. “Just as small businesses were doing well, we are faced with what could be [an] unmanageable price increase due to tariffs.”

“It’s a complete mess,” said another. “Several customers have already said that they are reluctant to purchase large dollar items for now and will wait. We sell outdoor furniture, interior/exterior accessories and gifts. This is the start of our prime furniture season. We are a one store, small business that is celebrating our 20th year. We only have floor samples and rely on special orders which mainly come from Mexico and China. We are now a “nice to have” not a “need to have”. It feels as if we are going through COVID all over again.”

Negative consumer reaction and slowing sales because of tariffs popped up frequently among survey respondents, with comments ranging from: “I think the most affected will be the consumer who will see a much higher cost for any item for home and décor” to “we will tank our industry and consumer spending will plummet across all categories” to “this tariff structure will not only raise prices, but reduce choices for the consumer.”

The specter of worsening inflation and a recession brought on by tariffs also peppered comments. “The tariffs are far too excessive,” was one comment. “They will lead to inflation in the U.S. and around the world as well as a recession.”

“These tariffs may just be the catalyst to the looming recession,” said another.

Still another said: “Whether the changes in tariffs and countries targeted is temporary or permanent, the chaos factor affecting investment, income and inflation rates is doing lasting damage.”

Categories to feel impact

No product sector within the home furnishings universe will be immune to the impact from tariffs, but the survey takers singled out case goods to be the most impacted, with 63% citing both bedroom furniture and dining furniture, followed by accent furniture (56%) and home office furniture (50%).

Upholstered goods are also high on the impact list with 49% mentioning motion upholstery and 42% stationary. At 22%, the mattress category was considered the least impacted by tariffs.

Beyond furniture, 46% believe home accents and décor were highly impacted, along with lighting (44%), rugs (43%), bath and bed textiles (36%) and window treatments (28%).

Bringing back U.S. production

The premise that the latest tariffs will bring back manufacturing to the United States was embraced by some and discounted by others.

Among those supporting the idea, one respondent said: “It may cause short-term chaos and prices increases, but how else will we re-establish America as a place where goods are made, with good manufacturing jobs? None of these tariffs are out of line, considering what our country has to pay to import goods from other places.”

“I am excited to see the playing field fair and more product manufacturing brought back to the United States. Since 2008 when our manufacturing went overseas or across the borders, product quality decreased and getting parts for repairs was challenging,” was another comment.

A U.S. furniture manufacturer, who said they were “cautiously optimistic” added that “tariff money needs to be spent shoring up U.S. manufacturing, the same way other countries’ governments support their manufacturers.” The respondent suggested that with Vietnam (subject to a 46% tariff) being its biggest competitor it would “give us 46% of our sales volume back in a rebate, and we’ll put 500 people to work at $20 or more an hour and offer the American people products at roughly 40% less than our current retails.”

Others, however, said the landscape has changed too much for a return to the past.

“Trump cannot bring case goods manufacturing back to America due to higher wages, 401(k)s, health insurance, etc. Making it here would cause it to be too expensive for all but the wealthy,” was one response.

“Tariffs will not stimulate domestic manufacturing as the president suggests,” noted a respondent. “The idea that, as an industry, we can pivot to domestic manufacturing when that disappeared over the last three decades is foolish. Furthermore, there’s little to no motivation to invest in factories here. The ROI would take many years and that requires a robust economy with strong consumer confidence, which is currently undermined with every passing day.”

Someone who has been in the industry since 1978, said: “U.S. manufacturing (has been) gone over a generation, starting in the late 1990s, so it’s not likely to return. The craftsmen of old Southern furniture are gone. Let’s not cripple the retail environment, not subscribe to this rah-rah mindset about bringing furniture manufacturing back to the U.S.”

“I don’t see this bringing furniture manufacturing back to the U.S. due to all the obstacles in place,” said another. “It is very difficult to insure a furniture manufacturing facility; the skillset needed to produce furniture is no longer widely available. High-paying jobs, particularly in North Carolina, will limit the number of available workers. It would take years to get a furniture factory online.”

Whether suppliers, retailers and designers and others are willing to look for new sources is a split decision, with about one-third of those surveyed saying they are somewhat likely to change where and how they source products and another 18% very likely to do so. However, the remaining 49% are somewhat or very unlikely to seek new resource avenues.

For its survey, Strategic Insights polled readers of Furniture Today, Home Accents Today, Designers Today and Home Textiles Today April 3-5. The 422 respondents included retailers (24%), supplier/manufacturers (50%), interior designers (8%) and others allied to the industry (18%).

See also:

• Trump’s reciprocal tariffs could spark the largest furniture sourcing realignment in decades | Bill McLoughlin
• The retail conundrum: To raise prices or not