by Many likely will wait until tariffs become final sometime in early July before placing orders
HIGH POINT — As with the manufacturing/supply side of the business, furniture retailers have largely applauded the 90-day pause in tariffs on Vietnam and other major furniture-producing countries in and outside of Asia.
That said, even the 90-day pause capping tariffs at 10% on all countries except China likely will cause some delay in buying decisions on new product being shown at next week’s High Point Market.
Of course, most larger retailers don’t write orders on new product at market, which allows them time to return to their stores and discuss what they’ve seen before making a final decision. But the 90-day reprieve, which would end around July 8, could drag out those decisions even further or at least until retailers actually see what the final tariffs might be.
Another thing is for certain: Many retailers likely won’t be placing orders on new product from China, which faces tariffs upwards of 145%.
“We are pretty much not going to be looking at Chinese goods because the tariff situation there has made it not feasible,” said Kyle Johansen, executive vice president at HOM Furniture in Minnesota, noting that the company is still working out longer-term solutions with vendors it already does business with on Chinese-made goods. “But everybody I am aware of has pretty much put all of their orders on hold out of China.”
Others said they too are likely to delay committing to some China product as they believe the Trump administration will keep a hard-line stance because of the threat it believes China poses to the U.S. from a manufacturing standpoint.
“We have canceled a couple of containers from China,” said John Moray, chief executive officer of Goman’s Home Furnishings & Interior Design in Michigan. “We will probably look at the product, but we will have to think about it because some of our vendors weren’t even sure what they were going to do with pricing. There is just so much uncertainty about it. So any vendors that are primarily based in China probably have to pause and figure out which way to go.”
For many, the focus will certainly be on getting product from other countries with lower tariffs. But here, too, they will likely depend on quick shipments of goods that are either in inventory or that are already on the water or about ready to ship from the source country, whether it’s Vietnam, Malaysia, India or Indonesia, for example.
A key challenge with new product is that it often doesn’t ship for several months after the market where it’s introduced. This means that buyers and even suppliers themselves won’t know what the actual price will be at market since the actual tariff could go up well beyond the 10% effective July 8.
“We are all waiting to see how much tariff will be put on Vietnam, Malaysia, Indonesia and the other countries,” said Jake Jabs, president and chief executive officer of Colorado-based American Furniture Warehouse, noting that the company buys from 12 different countries. “It will be interesting to see what happens and which countries pay the most duties and if some don’t pay any.”
That said, he noted that his inventory levels are at an all-time high, providing a lot of product that customers can still get at competitive prices.
“All of our import vendors are just swarming us with containers,” he said. “I am looking out my window here and I see that we have around 40 containers. We also have many containers on the water that are coming in.”
Given the 90-day reprieve, Keith Koenig, chairman of City Furniture in Florida, said that he doesn’t believe the tariff situation will impact City’s buying plans at market.
“I wouldn’t worry too much about it,” he said, adding, “I think it’s a distraction, but for us it’s going to be business as usual. Our buying plans are a function of how we are doing.”
He added that, fortunately, most of the products on its floors are doing well. “So I would not say that this is going to be a robust period for us to be making a lot of changes. … If there are major shifts in style trends, then you have to make bigger changes, but I don’t see that happening right now.”
For that reason, he noted, he doesn’t see City “bringing in a tremendous amount of new product right now. We will always be buying, and we will buy new groups, but it’s not going to be a big market for us in having to change a lot of stuff. … I don’t see any changes in our current business.”
He added that China remains an important source country for City despite the high tariff levels currently.
“I am telling my Chinese suppliers we are going to continue to do everything we can to keep our good business going with them,” he said, noting that the suppliers also have done their part with price reductions. “There are some realities if the tariffs stay at a high level, and that makes some items less competitive, but we will adapt to that.
“We will do what makes sense over time, but we have so many good Chinese suppliers, and there are some categories you just can’t buy elsewhere. We will look at it on a one-by-one basis. Many of the Chinese factories we do business with are good friends, and they are good organizations and good companies. We hope we will be able to work things out.”
Jabs, of American Furniture Warehouse, agreed that there are some product categories that are difficult to source outside China, including massage chairs and metal chairs, for example.
“We have had to raise our prices on some things, particularly the things we have been importing out of China,” he said, adding, “So we are going to have to buy some of these things, even if they are at high duties. Some of it you can’t get anywhere else.”
Indeed, some are holding out hope that China and the U.S. come to an agreement that results in lower tariffs on each country.
But the unknowns, including the final rates for other countries, also could impact future product development. For example, any delay in the purchase of new product could have a ripple effect on possibly limiting introductions at the fall market and beyond that results from a delay in shipping of new goods from April.
If anything, the back-and-forth, one-day-on, one-day-off nature of the administration’s handling of tariffs already has created disruption heading into market.
Joe Tyson, of Tyson Furniture of Black Mountain, North Carolina, said that he put a hold on one container of Indonesia-made product because of an original 32% tariff. Once he learned that had been lifted for 90 says, he reinstated the order, agreeing to pay half the new 10% rate.
“But I did tell them that I am not going to order any more containers until I see how this thing shakes out,” he said, adding that this also will impact buying decisions at market. “I talked to a rep today and I said, ‘You know, this is going to be a tough market because, I’ll be honest with you, we are not going to buy any of these new groups at market until we know exactly where we are on tariffs. I said it is going to be a poor market for most of you guys who are in the import business.’”
He added that the company also may buy merchandise that is ready to ship, “and we know what the tariff is. But none of this new stuff is going to be booked until we know where we stand. I am not going to be buying any new import groups unless there is a definitive answer on tariffs, and I don’t expect that by market.”
Johansen, of HOM Furniture, said that the company will continue to look at new product as it always does at market. But the uncertainty of tariffs will make it hard on some buying decisions.
“We will probably not place orders until there is a little bit of an understanding and shakeout on the tariffs,” he said. “We just can’t make a decision to buy something that who knows whether it’s going to stay at 10% in the case of Vietnam, or go back to 46%. Nobody knows, and there is no way to know and I think it’s just a fool’s errand to try to guess.”
Fortunately, he said, the company also has a strong stock position that will help it manage this period of uncertainty with plenty of high-value products for its customers.
“We have always looked at having inventory as a competitive advantage for us,” he said, adding that this also allows “us to ship things quickly and get a feel for where the rate of sale is more steady. … Having a stronger stock position across all our goods, we get a better feel for the rate of sale. We also are in a good spot in that we have a lot of containers on the water already.”
Walter E. Smithe III, president of Walter E. Smithe Furniture + Design in the Chicago area, also said tariffs will impact his company’s buying plans. While he noted that the company will still be looking at new product, there will be a push to find more in-stock items at least for the time being.
“I think we are going to stock more than we have in the past,” he said. “We are obviously going to be honing in on vendors that are probably going to be less likely dramatically impacted by the tariff situation.”
But he said that the industry still needs to find what’s new and exciting for their floors.
“Since Covid, the industry has taken a break from innovation, so we hope this doesn’t become another reason for the industry to be overly cautious,” he said. “The bottom line is that we as an industry need to move on. We need to keep up the pipeline of good product.”
Of course, some of this could be found on the domestic side, whether it’s upholstery, or case goods, but mostly case goods as more of that is imported relative to upholstery.
Smithe said, “We will focus on domestic product to the extent that we can,” although he also pointed out that even that mix includes some imported components. “The whole thing is a giant mess, and we are going to have to work through it the best way we can.”
HOM Furniture and Tyson’s furniture, which also sell a significant amount of domestic case goods on their floors, also said they will be keeping a lookout for domestic product that is tariff-free.
“Yes, domestic will be important and probably not just that but also Mexico,” Johansen said of the reprieve on Mexico tariffs. “We will probably be looking there for additional opportunities.”
Tyson also said that he will continue to shop for domestic product, including domestic upholstery, which makes up some 90% of his mix and case goods, which represents about 70% of the mix.
“If we had to, we could live totally domestically. And we would still be in business and would still be profitable,” Tyson said, noting that with the exception of things like teak furniture, most everything it sells it can get in the U.S. “We are not dependent really on anything that’s import that I can think of.”
Another retailer looking to continue its U.S.-made focus is Gallery Furniture in Texas. According to owner Jim McIngvale, some 80% of its floors feature U.S.-made product. Today, he sees that growing even more as part of the overall mix.
“We have never left the heartland, so we don’t have to return,” he said of the company’s ongoing push for American made. “We are just looking to buy more made-in-America furniture and other American products. We want to support American jobs.”
“Obviously, all of this can’t be made in America, but a huge percentage of it is, and even with some vendors where we are buying imports, we are rapidly trying to switch that over to made in America,” he added, noting the demise of furniture manufacturing jobs in this country has contributed to many of its woes. “All those jobs went away, and what happened? We had this little oxycodone and fentanyl epidemic. We believe that work is life’s greatest therapy, and we want to help Americans enjoy the joy of work. That is our story, and we are sticking to it. I ain’t changing.”
While he acknowledged that it’s difficult to buy everything American made in certain categories, “We keep chipping away at it and keep buying more made in America. We are very happy with our position, and we think if the tariffs are fair on both ends, the best people will win, and we are pulling for the boys wearing the red, white and blue.”
