New York — 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 conducted by HTT and its sister publications.
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.
“Everything will go up and the uncertainty of how long [tariffs] stay on will also impact and slow business down overall,” said one of the home textiles respondents. “Businesses cannot plan around maybes or uncertainty.”
Another home textiles respondent who said their company services the hotel industry was frustrated with Trump’s lack of insight into the supply structure for his own hospitality properties.
“I would love to ask him where he thinks his products for his hotels come from? We don’t have the machinery in the U.S. to make anything wide width, which accounts for 50% of most guestrooms.”
To get wide width looms and yarn spinners up and going to weave hospitality-grade window coverings would take years, they added. “Then, combine that with no labor now that average earning workers are being shipped [out of the U.S.] and his hotels will not be able to kept up to brand standards – equating to, yes, more bankruptcies.”
One home furnishings executive is cautiously hopeful for negotiations.
“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,” they said.
“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 unmanageable price increase due to tariffs.”
This is “going to create a huge decrease in demand because of the drastic prices increases the industry is forced to pass on to customers across the board and throughout the supply chain,” said another.
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 suggest,” 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.”
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 Textiles Today, Home Accents Today and Designers Today April 3-5. The 422 respondents included retailers (24%), supplier/manufacturers (50%), interior designers (8%) and others allied to the industry (18%).