Court of Appeals tariff ruling fails to grant the industry immediate relief

Implementation of order halting tariffs delayed until Oct. 15, while decision on furniture-specific tariffs looms just before October market

WASHINGTON — Friday’s decision by the U.S. Court of Appeals for the Federal Circuit that the president’s decision to impose tariffs was unlawful does not grant an immediate reprieve for the furniture industry or others purchasing products from foreign nations.

That’s because the implementation of any order halting tariffs has been delayed until Oct. 15, which gives the administration the opportunity to appeal the case to the U.S. Supreme Court.

Specifically, the decision notes that the president was not authorized to implement tariffs by executive order, which used the International Emergency Economic Powers Act as a basis to regulate imports.

The president cited areas of national security such as drug and human trafficking as a reason to impose tariffs, thus using this as a negotiating strategy to address these issues head on. However, the opinion noted that the Constitution grants Congress, not the president, the power to impose tariffs as a way to regulate commerce with foreign nations.

With an appeal likely, the case will certainly drag out past the Oct. 25-29 High Point Market, meaning that market pricing will need to reflect current tariff rates that went into effect around Aug. 7.

These include tariffs of 20% on Vietnam, 19% on Indonesia, 19% on Malaysia, 19% on Cambodia, 50% on India, 19% on Thailand and 20% on Taiwan, to name several key countries where furniture is produced.

And as of Aug. 29, the U.S. also ended its de minimis exemption that allowed shipments valued at $800 or less to enter the country tariff free. According to compliance firm Avalara, postal operators around the globe also have ceased shipments of low-value goods to the U.S. “until they fully understand and can comply with the new requirements.”

Further complicating matters for U.S. furniture importers is the ongoing Section 232 investigation into timber and lumber imports and derivatives of these products including wood furniture that could result in tariffs specifically applied to imported furniture. As touted on his Truth Social account on Aug. 22, the president said this investigation will be completed within roughly 50 days, which is just a week or so before folks will start coming into High Point for the October market.

By this point, most pricing — based on the aforementioned country-specific rates — will be long established on products shown at market, which attracts retailers and designers from around the U.S. and the world. The big unknown will be how much furniture specific tariffs will fall above the previously announced rates as the 232 investigation, along with other sector-specific tariffs, are not believed to be impacted by the Court of Appeals ruling.

All this continues to create huge uncertainty for an industry where manufacturers and importers already face tight margins thanks to the demands of retailers to maintain their own margins of 50% or more. Many retailers are reportedly refusing to take price increases, a totally unrealistic expectation given the strains on the industry.

Yet if retailers are balking at price increases now, they may want to brace for even higher price hikes once the Section 232 furniture-specific tariffs are announced, which largely will impact wood furniture. The other option will be to shop more domestic resources, which could offer a welcome boost for the domestic wood sector, although they too will face cost increases on imported components.

These are factors the industry needs to embrace because the message is clear: Tariffs will continue to raise the price of finished goods. How successful the industry is in managing these increases will be based on partnerships and the willingness to work together. Retailers that refuse to take price increases are living in an alternative reality as are suppliers that expect to pass the majority of the price increases along to their customers.

Everyone simply needs to realize that we as an industry are all in this together.