Furniture retailers face existential threat
A worker walks among rows of American-made furniture at Warehouse Showrooms Furniture in Alexandria, Virginia, USA. President Donald Trump’s sweeping new tariffs officially went into effect Thursday as he moves forward with his tumultuous efforts to reshape global trade.
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The Supreme Court struck down President Donald Trump’s so-called “reciprocal tariffs” on Friday. Whatever the decision, there is little comfort for the furniture industry.
Furniture importers face high import duties after the industry was hit last fall by higher tariffs imposed on items such as sofas, kitchen cabinets and vanities under Section 232 of the Trade Expansion Act.
While the country-specific “liberation day” tariffs, which were implemented under Trump’s International Emergency Economic Powers Act and announced in April, were examined by the country’s highest court, the special taxes of around 25% on furniture importers were not examined.
Further complicating the issue is a persistent set of uncertainties plaguing the industry, said Peter Theran, CEO of the Home Furnishings Association, the trade group that represents furniture retailers.
The 25 percent duty on certain furniture imports was supposed to be increased to 50 percent in January, but at the end of December this plan was postponed until 2027. It has also become common over the past year for Trump to threaten new tariffs on various imports that will never go into effect.
“This is a very, very difficult time to run your business,” Theran said. “The No. 1 reason it is difficult to manage your business is unpredictability and the inability to make alternative plans and invest in them because you don’t know what will happen tomorrow.”
increasing distress
The tariffs and the uncertainty they bring are the latest blow to the furniture industry, which has been suffering for the last four years and was under pressure before Trump’s trade war.
During the Covid-19 pandemic, with people stuck at home and flush with cash, many Americans took the opportunity to revamp their spaces and purchase new furniture and decor. Low interest rates then led to increased demand for new homes, which in turn acted as a catalyst for furniture purchasing.
The result was huge growth in the home goods industry and boom times in furniture.
However, as inflation and interest rates began to rise in 2022, the sector began to slow down, declining for the first time in at least seven years, according to data from Euromonitor.
American Signature Furniture, the parent company behind Value City Furniture, declared bankruptcy late last year after nearly 80 years in business. It started liquidation sales in its remaining 89 stores last month.
In its application to the court, the company said that changes in consumer spending and increasing costs after the Covid epidemic led to a 27% decrease in sales between 2023 and 2025. It was stated that net operating losses increased from 18 million dollars to 70 million dollars in the same period.
In the filing, the company stated that the company faces “significant liquidity constraints” by the end of 2024, and that these constraints are “further exacerbated and accelerated by the introduction of new tariff policies.”
At least 10 more furniture businesses have declared bankruptcy over the past year, according to CNBC’s review of federal bankruptcy filings; Some of them were liquidated and their activities were completely stopped.
Many of the companies are small businesses that are more affected by tariffs because they have fewer resources than their larger competitors.
“The smaller players will definitely be the ones that will be hit the hardest because they don’t necessarily have deep pockets, they don’t have the economies of scale, they don’t have huge sourcing teams that can suddenly try to change the destination or origin of products,” said Neil Saunders, retail analyst and managing director at GlobalData. “So they’re under a lot of pressure and we’ll probably see more failures in that independent space.”
Joseph Cozza, owner of small furniture business East Coast Innovators, supplies the following retailers: Macy’s and Raymour & Flanigan told CNBC that it had to raise prices by 15% to 18% to offset higher tariff costs, leading to a drop in demand during the holidays.
Cozza said he can keep his job for now, but hopes for a rate cut, a jolt in the housing market and higher-than-expected tax returns to spur sales.
“That’s what I’m praying for,” he said.
Otherwise, he said, he may have to move his business from Philadelphia to North Carolina, where operating costs are lower.
“I have a nice company with good employees and I pay them all really good wages and I get punished,” Cozza said. “I’m being punished for what I did and I don’t think it’s fair.”
Grabbing market share
The advent of tariffs created a It’s a market-grab opportunity for big businesses, which are better equipped than smaller businesses to weather policy changes and keep prices lower.
Last year, some large, publicly traded furniture companies increased their profits and sales despite higher tariff costs.
Ikea managed to keep prices relatively stable through fiscal 2025, keeping its revenue nearly flat compared to 2024, a news release said. It reported higher operating expenses but attributed the increase to a purchase it made in the Baltics, not to tariffs.
Right, Williams-Sonoma And wayfair Even though they faced higher import costs, their sales and margins increased.
In the nine months ending Nov. 1, RH saw sales rise almost 10% as margins widened. At Williams-Sonoma, sales rose nearly 4% in the 39 weeks ended Nov. 2, while operating margins also increased slightly. Wayfair, which announced fourth-quarter results on Thursday, saw its revenue rise 5.1% in fiscal 2025 as gross margin remained flat and operating expenses decreased.
Wall Street has yet to see the full impact of the furniture-specific tariffs on these companies because most last reported results around the time the tariffs went into effect.
However, they had already faced a wide range of taxes throughout 2025. Most U.S. furniture imports come from China, Vietnam and other parts of southeast Asia, which were subject to a series of high tariffs before furniture-specific duties were introduced. At one point, imports from China were charged with tariffs as high as 145%, while Vietnam faced tariffs of around 20%.
These country-specific mandates are those that were annulled by the Supreme Court. At the heart of the case was whether Trump had the legal authority to impose reciprocal tariffs that critics said violated Congress’s taxing authority.
A reversal of these tariff rates would mean even more uncertainty. The questions now are how the tariffs will be reinstated and whether the administration will find new ways to implement commercial initiatives.
“The CEO of one of the largest furniture retailers in the country told me, ‘Even if the tariff strategy resulted in the worst possible outcome for my business, then I would create a plan, invest in that plan, execute within that plan, and create the best possible outcome,” said Theran of the Home Furnishings Association.
“No one can do this,” he said. “No one can invest in a plan anymore because the tariff strategy has not stabilized. It continues to change.”
