U.S. Furniture Sector Under Fire: Trade Policy Shifts and Stock Market Reactions

The U.S. furniture sector is facing a perfect storm of trade policy upheaval and financial market volatility. President Donald Trump's 2025 announcements of sweeping tariffs on imported furniture—ranging from 30% on upholstered goods to 50% on kitchen cabinets and bathroom vanities—have sent shockwaves through the industry. These tariffs, set to take effect on October 1, 2025, are part of a broader strategy to “reshore” manufacturing and address trade imbalancesTrump vows to impose furniture tariffs. What would …^[2]. However, the immediate fallout has exposed deep vulnerabilities in the sector, particularly for companies reliant on global supply chains.

Sector-Specific Risks: Tariffs, Costs, and Supply Chain Chaos

The new tariffs have exacerbated existing challenges for U.S. furniture firms. According to a report by the Home Furnishings Association (HFA), the 10–25% tariffs imposed in 2023–2025 already increased production and material costs, forcing retailers to raise pricesAugust 2025 Insights on Furniture Tariffs^[1]. Trump's latest measures, however, amplify these pressures. For instance, companies like Wayfair and Restoration Hardware (RH), which source 60% of their furniture from China and VietnamHome goods retailers slide as Trump rolls out new furniture tariffs^[4], now face margin compression as they absorb higher import costs or pass them to consumers.

Supply chain disruptions are compounding the problem. As stated by the Business and Institutional Furniture Manufacturers Association (BIFMA), retaliatory tariffs from Canada and Mexico have pushed some manufacturers to consider shifting operations north of the borderAugust 2025 Insights on Furniture Tariffs^[1]. This shift, however, is fraught with logistical hurdles and higher labor costs, which many firms lack the capacity to absorb. Additionally, the industry is pivoting to alternative materials and designs to maintain cost efficiency, a trend that could reshape product offerings but may not offset the financial strainTrump vows to impose furniture tariffs. What would …^[2].

Stock Valuation Impacts: Winners and Losers in a Tariff-Driven Market

The stock market has already priced in the risks. Data from Bloomberg indicates that shares of Wayfair, RH, and Williams-Sonoma fell by 6–7% in pre-market and after-hours trading following Trump's announcementsHome goods retailers slide as Trump rolls out new furniture tariffs^[4]. These declines reflect investor concerns about eroding profit margins and sourcing challenges. For example, RH's recent earnings report explicitly cited tariffs as a reason for delaying strategic initiatives and reducing its full-year revenue forecastRH Stumbles as Trump's Tariff Threats Loom Large …^[3]. Historically, however, RH has shown a positive drift following earnings misses, with an average 11.9% gain by day 30 compared to the S&P 500's 0.2% decline.

Conversely, domestic manufacturers like La-Z-Boy and Ethan Allen Interiors have seen stock gains, with La-Z-Boy's shares rising by over 4% in the same periodHome goods retailers slide as Trump rolls out new furniture tariffs^[4]. This divergence underscores the sector's bifurcation: firms with robust domestic production capabilities are gaining market share, while import-heavy peers face existential threats. Analysts at AllianceBee note that U.S. furniture imports totaled $25.5 billion in 2024, with China and Vietnam accounting for 60% of the totalAugust 2025 Insights on Furniture Tariffs^[1]. The new tariffs are expected to force a significant reallocation of sourcing strategies, favoring companies with onshore manufacturing.

Long-Term Outlook: Can Tariffs Reshape the Industry?

While the Trump administration frames these tariffs as a tool to revive domestic manufacturing, industry leaders remain skeptical. The HFA and BIFMA have highlighted persistent challenges, including a shortage of skilled labor and rising input costs, which could limit the effectiveness of reshoring effortsAugust 2025 Insights on Furniture Tariffs^[1]. Moreover, consumer demand for furniture is already softening due to inflation and a housing market slowdownTrump vows to impose furniture tariffs. What would …^[2], creating a double whammy for retailers.

Analysts suggest that the sector's long-term health will depend on its ability to adapt. For example, companies like Home Depot and Lowe's, with diversified supplier networks, are better positioned to weather the stormAugust 2025 Insights on Furniture Tariffs^[1]. Meanwhile, digital transformation and supply chain diversification—such as shifting production to Mexico or Vietnam—may offer partial reliefRH Stumbles as Trump's Tariff Threats Loom Large …^[3]. However, these strategies come with their own risks, including geopolitical uncertainties and higher capital expenditures.

Conclusion: A Sector at a Crossroads

The U.S. furniture industry stands at a crossroads. While tariffs have created immediate headwinds for import-dependent firms, they also present opportunities for domestic manufacturers to gain market share. Investors must weigh the short-term volatility against the long-term structural shifts in sourcing and production. For now, the sector's performance will hinge on how effectively companies can navigate the new trade landscape—and whether Trump's vision of a reshored furniture industry can overcome its inherent economic and logistical challenges.