If you were hoping to upgrade your outdoor furniture for spring and summer, prepare to pay more, or opt for a picnic blanket instead.
Less than a week since the White House implemented sweeping taxes on imports to the United States, furniture companies have taken a big hit. And that could spell trouble for already cost-burdened consumers.
So far, the effects of the tariffs have manifested themselves in the stock market. In the past five days, major home furnishing manufacturers including RH, Wayfair and Williams Sonoma have seen share prices plummet.
That’s a signal for what’s to come for consumers if the tariffs stick around, according to industry analysts and executives.
Last week, President Donald Trump announced a minimum 10% tariff on some of the nation's biggest trade partners. Some of those partners, included among the biggest sources for furniture and materials, saw even larger tariffs.
Vietnam, for example, is facing a 46% tariff. In Indonesia, that figure is 32%, and in China it’s 34%.
Though some furniture production takes place in the United States, “due to a lack of production capacity, skilled labor, and very high cost of production, the industry as a whole is still highly reliant on imports of foreign materials, components and finished goods,” according to Ana Arun, CEO of furniture producer Lifestyle Solutions Venture LLC/Coddle.
And for manufacturers who do make their products in the U.S., there will likely still be increased costs, said Shawn Zar, an interior designer at custom furniture maker Superior Seating.
“The raw materials for production are still imported,” he wrote in a message, “and accordingly, the price of the furniture will increase since tariffs apply to all raw materials from which furniture is made.”
Now that those imports are more expensive, the effect on consumers will be swift, Arun said.
“The most noticeable immediate impact will be higher prices,” she said. “Businesses will not be able to absorb this level of tariffs levied on them.”
Demand expected to soften
In response to previous tariffs levied against China in 2017, many furniture manufacturers shifted their production to other Asian countries, including Vietnam, Indonesia, India and Malaysia. Now, the majority of living room furniture — as well as textiles, lighting and vanities, among other products — is sourced from that region, Arun said.
The tariffs will make it pricier to secure all of those goods, and more.
Though it’s still too early to determine exactly how much prices will increase, the industry expects that more affordable products could take the brunt of the impact, according to Julia Wilson, consumer and retail strategy leader at advisory firm KPMG. That’s because many of the materials used to make those products, such as metal, plastic and hardware, are highly exposed to tariffs.
“The initial thought is that the consumer will hurt the most,” she said in an interview.
Before last week, consumers were already losing confidence and reigning in their spending. Now, with higher prices, there could be an even sharper pullback in big-ticket purchases, and that could hurt companies, according to Wilson.
“The consumer was already beginning to make choices about what they were purchasing. A lot of their share of wallet was going to the absolute essentials,” she said. “The consumer is more likely to shy away from some of those big-ticket items … Demand is going to go from soft to softer.”
Companies try to prepare
For now, Wilson said, her clients in the furniture retail industry are doing a lot of “scenario planning” for the long term.
That means trying to determine the tariffs that will last and how long they will be active, she said.
“You can’t change a supply chain overnight,” Wilson said. “There’s probably a little bit more of a hunkering down that will happen at least for the near term on most of these companies’ agendas.”
And if companies actually intend to shift their production to the United States, it could take years before a degree of normalcy is established.
More than just financial and infrastructural resources, that change would take time, according to Arun. She estimated that it would take roughly three to five years to bring manufacturing back to the U.S.
All told, companies are now navigating the uncertainty of what’s to come, and as they do that, consumers will likely face higher prices.
“As you think about consumers and what they think about the future, the impact of tariffs is not just how much things are going to cost,” Wilson said, “but I think the economy is going to do worse because of the tariffs.”