by History shows that higher-priced imports only shift production to other low-cost countries
HIGH POINT — Anyone keeping up with our newsletter in recent weeks has likely taken notice of our coverage of potential tariffs.
While most of the discussion has not risen to the level of specific actions relating to furniture, it’s a subject that companies have reluctantly had to address in order to have a feasible strategy in place. Without a plan, they most certainly will fall flat-footed and potentially leave themselves and their customers in a bind, when it comes to pricing.
It’s a subject we have discussed with many different resources since the November election, including at the recently concluded Las Vegas Market. While many companies have not revealed specifics, perhaps for competitive reasons and the fact that it’s still early in the game, it’s encouraging to know that they are taking the threats seriously.
And so far, these mostly have been threats, particularly the 25% tariffs on Canada and Mexico. For manufacturers there, it’s had some disruptive impact, particularly on new orders for both custom and non-custom goods. The simple reason being that most don’t know what to charge these customers, who in turn wouldn’t know what to charge consumers.
Of course, another alternative is to get as many goods shipped across the border as possible by the time a 30-day extension to the original tariff deadline is up around March 1. But that only impacts goods to be shipped in the coming days and weeks, not goods to be shipped in three to four weeks or beyond, which could have a chilling impact on shipments as those may be on hold because of uncertainty relating to final pricing.
The intent behind the tariffs, be it on Mexico, Canada or China, is multilayered in that they aim to address multiple issues ranging from pirating of technology to illegal immigration.
Of course they are also aimed at dealing with the flow of illegal drugs flowing into this country, which obviously is based on a huge demand.
But another issue that tariffs often aim to address is job losses in the U.S. related to imports. We’ve seen this before in the industry, most notably with the placement of duties on Chinese-made wooden bedroom furniture.
Note that while many people use the term duties and tariffs interchangeably, there is a difference. Duties aim to address unfair pricing tactics of foreign manufacturers and the subsidization of those companies by the foreign government, which in turn have collectively caused financial harm to U.S. producers. Tariffs, on the other hand, are a tool the government primarily uses to address other larger security-related issues, including immigration, trade deficits and intellectual property theft, for example.
But both have had a similar result in the furniture industry. The duties on Chinese-made wooden bedrooms mainly shifted production to Vietnam and other countries in Asia, including Malaysia, Indonesia and later India. Tariffs that the Trump administration imposed early in his first administration mainly shifted upholstery production out of China and into Vietnam and other Asian countries.
You could argue both tariffs and duties have helped preserve some American jobs for both case goods and upholstery manufacturers. But there hasn’t been a huge influx or creation of new jobs related to either segment as a result. Investments made in domestic manufacturing have largely been related to temporary or short-lived spikes in market demand, some of which occurred during the pandemic. Even some Mexico manufacturers benefited during this period, particularly as it related to supply chain disruptions in Asia.
But much of that has been short lived, with much production shifting back to Asia. Many furniture retailers have seen to that in their quest for the lowest priced and in some cases, lowest quality, commodity product, much of which could face tariffs moving forward.
Even raw materials that U.S. manufacturers import from China and other countries could be impacted as those products too could face tariffs, thus causing further price pressure for those companies.
Ironically, 2025 was supposed to be a turnaround year for the industry with increasing consumer demand and sales at retail. But now that the threat of tariffs has once again reared its ugly head, the industry finds itself in turmoil and uncertainty yet again, especially as it seeks to shift sourcing and keep any related price increases to a minimum.
But one thing is for sure, should the tariffs take effect as we fear: The consumer will pay more and not just for furniture but for everything else they buy that’s imported from the countries affected.
