Connect with us

Business

Small furniture retailers face existential tariff threat, despite Supreme Court ruling

Published

on

Small furniture retailers face existential tariff threat, despite Supreme Court ruling


A worker walks through rows of American-made furniture at Warehouse Showrooms Furniture in Alexandria, Virginia, US. President Donald Trump’s sweeping new tariffs officially took hold Thursday, as he barrels forward with his turbulent push to reshape global trade.

Bloomberg | Bloomberg | Getty Images

The Supreme Court struck down President Donald Trump’s so-called “reciprocal tariffs” on Friday. Regardless of the ruling, there’s little comfort to be found for the furniture industry.

Furniture importers are facing steep import duties after the industry was hit with higher tariffs on items such as couches, kitchen cabinets and vanities last fall under section 232 of the Trade Expansion Act.

While Trump’s country-specific “liberation day” tariffs imposed under the International Emergency Economic Powers Act and announced in April were under review by the nation’s highest court, the duties specific to furniture importers, of around 25%, were not.

Compounding the issue is a constant thread of uncertainty plaguing the industry, said Peter Theran, CEO of the Home Furnishings Association, the trade group representing furniture retailers.

The 25% duty on certain furniture imports was supposed to rise to 50% in January, but at the end of December, that plan was pushed back to 2027. Its also become common over the past year for Trump to threaten new tariffs on various imports that never end up getting enacted.

“This is a very, very difficult time to manage your business,” said Theran. “The No. 1 driver of the difficulty of managing your business is unpredictability and an inability to make alternative plans and invest in those plans, because you don’t know what tomorrow will be.”

Rising distress

Tariffs and the uncertainty they’ve brought are the latest blow to the furniture industry, which has been struggling for the past four years and was under pressure well before Trump’s trade war.

During the Covid-19 pandemic, when people were stuck at home and flush with cash, many Americans took the opportunity to refresh their spaces and buy new furniture and decor. Then, low interest rates brought a surge in demand for new homes, which served as a catalyst for furniture buying. 

The result was outsized growth across the home goods industry and boom times for furniture.

But as inflation and interest rates began to creep up in 2022, the sector started to sputter, and it later declined for the first time in at least seven years, according to data from Euromonitor. 

By the time tariffs came around, home sales had slowed and some furniture companies were already struggling to keep operations afloat and couldn’t manage the sudden increase in fixed costs. 

American Signature Furniture, the parent company behind Value City Furniture, declared bankruptcy late last year after nearly 80 years in business. It began liquidation sales at its 89 remaining stores last month. 

In a court filing, the company said the aftermath of the Covid pandemic, subsequent shifts in consumer spending and rising costs led to a 27% decline in sales between 2023 and 2025. Net operating losses ballooned from $18 million to $70 million during the same time period, it said. 

By the end of 2024, the company was facing “significant liquidity constraints,” which were then “further exacerbated and accelerated by the introduction of new tariff policies,” the company said in the filing. 

Over the last year, at least 10 other furniture businesses have declared bankruptcy, with some liquidating and ceasing operations altogether, according to a CNBC review of federal bankruptcy filings. 

Most of the companies are smaller businesses, which have been hit harder by tariffs because they have fewer resources than their larger competitors.

“The smaller players are definitely the ones that will be the hardest hit because they don’t necessarily have deep pockets, they don’t have the economies of scale, they don’t have the huge sourcing teams that can suddenly look to pivot the destination or the origin of the products,” said Neil Saunders, retail analyst and managing director at GlobalData. “So they are under a lot of pressure, and we probably will see more failures in that independent space.” 

Joseph Cozza, whose small furniture business East Coast Innovators supplies retailers such as Macy’s and Raymour & Flanigan, told CNBC he was forced to raise prices between 15% and 18% to offset higher tariff costs, leading to a slide in demand over the holidays. 

For now, Cozza said he can keep his business running but is hoping for an interest rate cut, a jolt to the housing market and larger-than-expected tax returns to spur sales. 

“I’m praying for that,” he said. 

If not, he might have to move his business from Philadelphia to North Carolina, where operating costs are lower, he said. 

“I have a nice company with nice employees, and I pay them all a really good wage, and I’m being penalized,” said Cozza. “I’m being penalized for what I do, and I just don’t think that’s fair.”

Market share grab

The advent of tariffs has created a market grab opportunity for larger businesses, which are better equipped than smaller businesses to weather policy changes and keep prices lower.

Over the last year, some large and publicly traded furniture companies have actually been growing profits and sales despite higher costs from tariffs. 

During Ikea’s fiscal 2025, it was able to keep prices relatively steady and revenue about flat compared with 2024, it said in a news release. It did report higher operating expenses but attributed the increase to an acquisition it made in the Baltics, not tariffs. 

RH, Williams-Sonoma and Wayfair have all grown sales and margins even as they faced higher import costs. 

In the nine months ended Nov. 1, RH saw sales grow almost 10% as margins expanded. At Williams-Sonoma, sales grew about 4% in the 39 weeks ended Nov. 2 while operating margins grew slightly. Wayfair, which reported fourth-quarter results on Thursday, saw revenue grow 5.1% in fiscal 2025 as gross margin stayed steady and operating expenses fell. 

Wall Street has yet to see the full impact of furniture-specific tariffs on these companies because most of them last reported results right around the time the tariffs were enacted.

But they already faced a wide array of duties throughout 2025. Most U.S. furniture imports come from China and from Vietnam and other parts of southeast Asia, which have seen a range of higher tariffs before furniture-specific levies were introduced. At one point, imports from China were tariffed as high as 145%, while Vietnam faced tariffs of around 20%.

Those country-specific duties were the ones struck down by the Supreme Court. At the heart of the case was whether Trump had the legal authority to impose what he called reciprocal tariffs, which critics said infringed on the power of Congress to tax.

A reversal of those tariff rates means even more uncertainty. Chief among the questions now is how the tariffs will be refunded and whether the administration will come up with new ways to implement trade initiatives.

“A CEO of one of the largest furniture retailers in the country said to me, ‘Even if tariff strategy ended up with the worst possible outcome for my business, I would then create a plan, invest in that plan, execute under that plan and create the best outcome that’s available,'” said Theran of the Home Furnishings Association.

“No one can do that,” he said. “No one can invest in a plan now, because the tariff strategy has not stabilized. It keeps changing.”



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Asian stocks today: Markets trade in green after US SC’s blow to Trump’s tariffs; HSI jumps over 2% – The Times of India

Published

on

Asian stocks today: Markets trade in green after US SC’s blow to Trump’s tariffs; HSI jumps over 2% – The Times of India


Asian markets inched higher on Monday after the US Supreme Court invalidated a major part of President Donald Trump’s tariff framework, a policy that had shaken the global economy since last year. Hong Kong’s HSI climbed more than 2% or 579 points reaching 26,992 with ecommerce heavyweights Alibaba and JD.com each jumping over three percent. Seoul also scaled a fresh record high to 5,816, buoyed by strong gains in chipmakers Samsung Electronics and SK hynix.Markets in Singapore, Wellington, Taipei and Manila also ended in positive territory, while Sydney slipped. Meanwhile, trading in Tokyo and Shanghai was shut due to holidays.The gains across the region were driven primarily by technology stocks. These companies have powered much of Asia’s market strength this year as investors increasingly shift funds away from Wall Street in search of relatively cheaper valuations. Trump’s trade strategy suffered a significant legal setback on Friday when the nation’s highest court ruled that the International Emergency Economic Powers Act, which the White House relied on in April to introduce broad tariffs, “does not authorise the president to impose tariffs”. In response, the president pledged to introduce a fresh global tariff of 10% using another legal route, which by Saturday, he had increased to 15%. The latest developments have injected a new layer of uncertainty into the trade outlook. There are now also demands for authorities to return funds collected under the earlier tariff scheme, while analysts caution that the administration could still look for alternative mechanisms to enforce duties.The court’s decision has also affected the outlook for trade agreements negotiated by Washington. Even so, investors in Asia largely welcomed the ruling, which is widely viewed as supportive for China and India. Technology counters emerged as the biggest winners.In currency markets, the dollar came under pressure, falling sharply against the yen, pound and euro. Meanwhile, oil prices declined by more than one percent on optimism surrounding a potential Iran nuclear deal.



Source link

Continue Reading

Business

Zudio, Trends: Budget fast fashion is taking small-town India by storm

Published

on

Zudio, Trends: Budget fast fashion is taking small-town India by storm



More Indians in small towns are now shopping for affordable brands instead of unlabelled goods in the bazaars.



Source link

Continue Reading

Business

AI contributes to spike in fashion sales complaints to Citizens Advice

Published

on

AI contributes to spike in fashion sales complaints to Citizens Advice



The rising use of AI by fashion retailers contributed to Citizens Advice receiving almost 18,000 complaints from customers last year – a surge of 21% on a year earlier, it has reported.

The advisory service said it was helping a consumer with a fashion purchase every seven minutes, finding that the ever-increasing use of AI “makes it easier for scammers to trick people into buying items that look nothing like the images advertised”.

According to the charity’s consumer service, 82% of complaints about clothes, shoes and accessories related to online orders (14,487), while 14% were bought in-store (2,569).

Women’s clothing caused the most headaches, making up almost half (48%) of all complaints (8,508), while men’s clothing made up 20% (3,523).

The most common five issues suffered by fashion buyers last year were faulty goods, making up 18% of all complaints, delivery failures or delays (13%), trouble returning unwanted goods (12%), breach of contract (9%) and poor customer service (6%).

Of last year’s complaints, one in 13 involved scams, including shoppers thinking they were buying items from UK-based companies, due to their advertising.

Instead, consumers had received poor quality items that were not as pictured, and, when they tried to return them, were asked to pay expensive fees to send them to an address overseas.

One consumer, Hannah, a mother in her 30s from the East Midlands who did not want her surname published, told Citizens Advice she was Christmas shopping online when she saw a jacket she liked advertised at half price.

The company selling the jacket claimed it was based in London’s Covent Garden, and Hannah bought it for £35 using a debit card.

Hannah said: “The jacket took a few weeks to come and when it did, it was a totally different material and colour, and not as premium as it was pictured. The pockets were different and it had massive plastic buttons, but the one in the photograph had nice metal ones. It even smelled cheap.”

Hannah emailed the company to complain and request a refund.

She said: “The service felt very different to any other clothing company I’d dealt with. They asked for pictures of the jacket I’d received and I thought ‘this company sent the item to me, surely they should know what it looks like’. They also emailed me on Boxing Day.

“They said I could return the jacket if I sent it to China at my own expense, it left me fuming. I looked up the cost of shipping and it was about £15. The website clearly stated it was a UK business, which was deceptive.”

Hannah reported the incident to the Citizens Advice Consumer Service, and was able to get a full refund through her bank, which covered the cost. Eventually, the company did issue a refund itself.

Jane Parsons, consumer spokeswoman at Citizens Advice, said: “Shopping should be simple and stress-free, but every year we hear from thousands of frustrated people who have a tough time trying to resolve issues with retailers and sellers.

Consumers face all kinds of problems from receiving faulty items, to waiting weeks for deliveries and poor customer service. Plus, the ever-increasing use of AI makes it easier for scammers to trick people into buying items that look nothing like the images advertised.

“It’s important consumers know what steps to take before they part with their cash or after there’s an issue. It can make all the difference in avoiding a trap or getting a refund.”

Mike Andrews, national coordinator of the National Trading Standards eCrime Team, said: “Online retail scams leave shoppers out of pocket and understandably frustrated.

“What appears to be a genuine retailer can turn out to be a fake website, a misleading advert or goods that never arrive.

“Criminals are increasingly using professional-looking sites and convincing promotions to exploit people’s confidence in well-known brands.

“We would encourage consumers to pause before buying online – check the retailer using a URL checker from a reputable website like Get Safe Online, be cautious of offers that seem too good to be true, avoid buying directly through social media adverts and always pay by card or a secure payment platform.”

UK consumer laws are difficult to enforce when sellers turn out to be based overseas.

Citizens Advice suggests the following before buying from an unfamiliar company:

– Check reviews on search engines and third party websites– Watch out for heavily discounted, ‘too good to be true’ prices and huge closing down sales– Be mindful of the targeted shopping adverts in your social media feeds – this is often how customers are drawn in– Consider whether images used to advertise an item were created by AI. This can be difficult, but look for overly airbrushed images, inconsistent textures or distortions on the face and body– Check the company’s website delivery information. Overseas stores offer shipping to the UK in a much longer timeframe than a genuine UK brand would– If you’ve been caught out by this type of scam and you paid by debit or credit card, you may be able to use a ‘chargeback scheme’ or a ‘section 75’ claim to get a refund.



Source link

Continue Reading

Trending