Industry responds: Impact of new tariffs would be significant and costly
Tariffs proposed by the incoming administration would be impactful and result in prices increases, according to furniture retailers and manufacturers surveyed by Furniture Today.
HIGH POINT — New tariffs would have a significant impact on the furniture industry, according to more than 200 respondents participating in an exclusive poll from sister publication Furniture Today conducted Dec. 2-4.
Nearly half of respondents (46%) said 25% tariffs on goods from Canada and Mexico and an additional 10% tariff on Chinese products, as proposed by president-elect Donald Trump, are likely to have a “very significant” effect on business. Another 40% called the new tariffs’ impact “somewhat significant.” Only 2% said the tariffs would have no impact at all.
How this will shake out for the furniture industry will take many forms, but respondents said price increases for consumers (87%) and within the supply chain (83%) are the most likely result.
Other impacts they identified included a rise in inflation (cited by 71%), companies moving furniture production to other countries (68%), retaliatory tariffs imposed on U.S. furniture exports (56%), product shortages (44%) and manufacturing job losses in the tariff-targeted countries (43%).
Nearly half (45%) of respondents said another significant outcome would be a reduction in U.S. furniture sales in the coming year. In contrast, just 13% said furniture sales would see an uptick before year-end as consumers tried to avoid potential price increases or shortages.
One potential bright spot for domestic producers would be an increase in demand for American-made products, cited by 41%.
When asked what measures, if any, retailers and manufacturers planned to take in the face of new tariffs, responses fell into these key camps: raise prices, shift or adjust international sourcing, increase domestic sourcing, make inventory adjustments before the tariffs, implement layoffs or downsizing, develop long-term strategies and take a wait-and-see stance.
Among those considering production shifts, specific countries cited as potential new or expanded sources included Vietnam, India and Brazil along with Europe and, more generally, countries with no or low tariffs.
Confidence in the actual implementation of the tariffs as proposed is somewhat unclear for both retail and manufacturing leaders who participated in the poll. Although two-thirds said they were very or somewhat confident the tariffs will be enacted as outlined, another nearly 17% believe there will be changes before the new administration takes office in January, and about 18% weren’t sure which way things will go.
If new tariffs are put in place, the impact is likely to be immediate, according to 40% of respondents. A more delayed reaction is expected by 30%, who see impacts occurring within a few weeks and another 19%, who expect the fallout would be felt in a few months’ time.
For the most part, respondents have some ties to China, Canada and Mexico, with one-third noting more than half of their business is aligned with one or more of the three countries. Among all respondents, 57% said they imported or sourced furniture from China, 34% imported or sourced from Mexico, and 18% did the same from Canada.
China (38%) was also the leading source country among those selling furniture, followed by Mexico (33%) and Canada (27%).
Asked which industry segment would be most affected by the tariffs, respondents ranked upholstery as No. 1, followed by case goods, furniture components, textiles and mattresses.
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