by While many are optimistic given the 90-day reprieve on higher tariffs, reception to new products not hitting retail floors for another 6 months remains an unknown
HIGH POINT — The 90-day delay in implementation of high double-digit tariffs on countries around the globe has given the industry a temporary reprieve from widespread disruption that would likely have stopped orders in their tracks for the foreseeable future.
And as the industry heads into the High Point Market in just two weeks, it also gives companies a better idea on how to price goods, particularly with a relatively low 10% tariff that applies to every country but China, which now faces a 145% tariff, just a day after the proposed 125% tariff announced by the Trump administration.
“We are going to see what happens within this 90 days, but I am encouraged there have been trade delegations coming to the table to cut deals,” said Jim O’Keefe, vice president of sales at Howard Miller and Hekman. “I am hoping the impact will be minimal.”
He also noted that the company will be holding its prices, in effect becoming what it calls a “tariff-free zone” at market where dealers can lock in deals on orders as they are written. This also aims to be an incentive for dealers to place orders at market both on new and inline product.
It’s a similar approach the company took with the turmoil during the pandemic with high container prices.
“Our plan is to do the same, to honor the price at the time the order is written,” O’Keefe added, noting this is to give customers an assurance that the price will remain in place for the foreseeable future.
The alternative, he said, could be a lot of canceled orders, particularly if tariffs rise dramatically in a few months.
“We will take the order and share the risk,” he said. “Hopefully, this will create some comfort with our dealers so they know what the deal is when they write the order.”
The challenge for importers is the unknown of what will happen after the 90-day reprieve. Most execs we interviewed for this story don’t believe the rates will stay at 10%, particularly for Vietnam, which ships a significant amount of wood furniture and even upholstery for the U.S. market.
But despite that uncertainty, some don’t think it will have a big impact on orders at market, including for new product which typically doesn’t hit retail for five to six months, just on the cusp of another furniture market.
Todd Wanek, president and chief executive officer of Ashley Furniture, told Home News Now that he doesn’t believe the uncertainty about what will happen after the 90-day period will have a major impact on placements for new product at market.
For one, he believes that many countries that produce furniture have already come to the negotiating table to work out deals that will keep the tariffs to a minimum — perhaps not the 10% but something much more palatable than 46% in Vietnam’s case.
“Vietnam specially has been very aggressive about working with the United States in determining how they can lower their tariffs, which is a very good sign,” he said. “And I am sure all the other countries are doing the same thing. We are very encouraged by the steps these countries are taking and everything they are doing. It feels like they are very open for business and are willing to negotiate.”
Citing published reports, he noted that the triple-digit tariffs on China have already caused massive cancellations in orders that will disrupt the supply chain substantially. However, he said that Ashley is not impacted as it is 100% out of China.
He also noted that Ashley is well positioned as both a domestic supplier and an importer of finished goods, allowing its dealers plenty of options within the line.
“We have some domestic supply for furniture, but if you are looking for a bedroom suite or a dining room or finished wood occasional tables, its pretty much Vietnam, Malaysia and Indonesia,” he said. “Those are the countries they have to go to for this. … I know a lot of companies that canceled their orders in Vietnam and I ask why? What are you going to do, not sell furniture? I don’t understand that approach.”
He added that Ashley has maintained its sourcing network despite the uncertainties of where tariffs will land.
“We are not changing one thing in our supply chain,” he said. “We have been out of China 100% but other than that, I wouldn’t shift my supply chain because I don’t know where else you would go.”
Some companies acknowledged that they still have some production in China including Furniture Classics and AICO.
In Furniture Classics’ case, the product includes some seating along with reclaimed wood pieces that are difficult to source elsewhere without sacrificing the look or quality. In AICO’s case, China product includes some wood furniture collections.
Michael Ricks
“Now I am at the point where I have got to look to pull my product out of China,” said Michael Ricks, president of Furniture Classics, noting that one of the company’s source factories in China is opening a factory in Cambodia. Furniture Classics also sources product in Indonesia and India, both of which have their own unique capabilities in wood furniture.
Ricks added that the company also has inventory in the U.S. that buyers can purchase free of duties along with some goods in transit, including products from the lower-tariff countries.
He compared the situation today to the time during the global pandemic when the company and others were paying container rates of $22,000 or higher.
“Back then, we had to make some very difficult decisions, and our customers were very understanding. They were good partners, and we all made it through it together,” he said, believing the same approach will continue this time around although how much additional cost they are willing to bear remains an unknown.
The company already has raised prices on most of its China-made product and is now looking at pricing to determine what to do next.
“We have been trying to watch the marketplace and see what some of our peers and competitors are doing,” Ricks said. “I have to do something, but what an awful time to be heading into market.”
AICO President David Koehler said that he hopes that the U.S. and China can come together to work out an agreement.
Fortunately, he said, the company has a strong international business that can support much of its product coming out of China.
“There are no problems shipping to Kuwait or Qatar or Dubai,” he said. “There is no change in how we do business with those countries. We are fortunate in that regard. … That has been a really strong part of our business over the years.”
It also sources much of its product in Vietnam and Turkey where the tariffs remain at 10% for now.
“Obviously we are encouraged by what went on today,” he added of the move to create the lower rate for the 90-day period earlier this week. “We will see where things go with China. Obviously there are things we have to react to in our business. …There are some challenging waters to navigate out there right now.”
The company also previously announced that it has more than 50 collections in its Pico Rivera, California, warehouse that remain free of reciprocal tariffs as long as supplies last. This means dealers can order this product tariff free and receive it in a short amount of time.
Much like what happened during the pandemic, the quest for inline goods that are in stock certainly could drive business at market as dealers try to get their hands on as much tariff-free product as they can. With inventories said to still be at healthy levels, that provides importers a glimmer of hope for a successful April event. (For more on the importance of inventories right now, see Brian Carroll’s excellent overview of RH’s latest earnings call.)
But companies interviewed for this story also believe the 90-day reprieve will allow them some success with new introductions, too.
“At least we know we can go into market and price our product and introduce it and people will know what it is going to cost them to do business with us,” said Sean O’Connor, president of case goods and upholstery resource Universal Furniture. “This just gives us that clarity for at least the next 90 days.”
He said that there are still challenges including 25% tariffs worldwide on steel and aluminum as well as high tariffs on fabrics coming out of China that are used in domestic upholstery lines throughout the industry that will likely drive up the cost of finished upholstery ranging from sofas to sectionals.
Still, he doesn’t believe that uncertainties of what will happen with the rates in a few months will stem dealer interest in new product, particularly as companies like Universal and others aim to share in the cost of any increases with their retail partners.
“If it is good product, I don’t think it will impact it,” he said. “If we were alone in this or anybody was alone in this, that would be a good question. But the fact is that we as an entire industry are impacted by this, and not just our industry, but the whole world that imports from any of these countries. It could be Vietnam, it could be Indonesia, it could be India. Wherever it is coming from, anybody that imports the same type of product that you get from that place is going to be in the same boat. So we are going to go up the same relative amount, whether it is 5%, 10% or 20%. It is all going to be relative.”
John Wampler, president of JGW Furniture, said his company sources its line of upholstered beds, chairs, benches and ottomans in Vietnam and Malaysia. While pleased about the lowering of tariffs to 10% for 90 days, he doesn’t believe it will stay at that rate.
“It (the tariff) is still going to be something, but at least it gives you a little breathing room, so I feel better about it,” he said, adding that it is also important to have a plan in place to be prepared for what may develop.
“The worst thing you can do is not have an articulated plan on what to do,” he added. “You better tell people exactly what you are going to do, or they are going to turn around and walk out. … To me, the most important thing is to keep product flowing and to have a game plan.”
Of course how market shapes up for most suppliers at market ultimately will depend on retailer reaction and willingness to take on any new product to their floors, particularly at potentially higher prices. Some retailers interviewed for this story said that while they are open to seeing new product, they might not be willing to order product not knowing what the full final cost might be beyond the 90 days.
