Don’t look now, but President Trump just issued more sweeping tariffs. This latest round stands to affect two groups particularly hard: homeowners and furniture and home furnishing companies. That’s because the new round of Trump’s tariffs will see up to 50% fees applied to kitchen cabinets and upholstered furniture imported into the United States. Here’s what you need to know.
What’s happened?
Yesterday, the president of the United States took to his social media platform to announce another sweeping round of tariffs, including a 100% tariff on some pharmaceutical products and a 25% tariff on heavy trucks. But smack in the middle of those two high tariffs was another tariff Trump announced, this one of 50%.
The president said that from October 1, there will also be new, 50% tariffs on select home items, including bathroom vanities, kitchen cabinets, as well as other “associated products.” But Trump didn’t stop there. He said that from the same date, there would also be 30% tariffs on upholstered furniture.
“The reason for this is the large scale ‘FLOODING’ of these products into the United States by other outside Countries,” the president wrote. “It is a very unfair practice, but we must protect, for National Security and other reasons, our Manufacturing process.”
While Trump said that pharmaceutical companies that are breaking ground on manufacturing facilities, or have facilities under construction, in the United States won’t be hit with the 100% duties, he gave no indication that companies could escape the 50% kitchen cabinet and 30% upholstered furniture levies.
Swedish furniture company Ikea could be hit hard
Shortly after Trump’s latest tariff announcements, “Ikea tariff” began trending on social media. It’s easy to see why. The Swedish company Ikea is the most prominent name in the home furnishing space in America. The company’s store locator tool lists more than 50 locations in the U.S.
What’s especially bad for Ikea is that relatively few of its products are manufactured in America. The company has previously said that only about 10% of the products it sells in the United States are made in North or South America. Roughly 90% of its products are imported from overseas.
In a FAQ on Ikea’s Spanish website, the company says that it has over 1,200 furniture suppliers around the world, and notes that “The five countries that supply the majority of products and services to Ikea are China, Poland, Italy, Germany and Sweden.”
Given the number of products that Ikea sells that would be covered under Trump’s new 30% to 50% tariffs, the company now risks a major hit to its margins in the United States.
Fast Company has reached out to Ikea for comment on how Trump’s new tariffs will affect the company.
What do the new tariffs mean for homeowners?
Of course, Ikea and similar home furnishing companies are the only ones Trump’s new tariffs will hit hard. American homeowners and renters are likely to feel the pain of the new tariffs, too.
It’s highly unlikely that Ikea, like most companies, will simply absorb the cost of the tariffs themselves. They will first try to offset some of those costs by asking for price concessions from their suppliers. However, the next step is usually to raise the prices of the tariffed items, so the end-buyer—the American consumer—pays more for them.
This means that homeowners and renters seeking new furniture for their dwelling will likely see a hike in prices in the near future after the tariffs come into effect next Wednesday.
How are furniture and home furnishing stocks reacting?
Ikea is a private company, so its shares aren’t traded on the public markets. However, there are plenty of other publicly traded furniture and home furnishing companies. Surprisingly, many of their investors seem to be taking the news pretty well.
Most of the stock prices of the home furnishing companies below are trading relatively flat as of the Time of this writing.
- Bassett Furniture Industries, Incorporated (Nasdaq: BSET): up 2.4%
- Hooker Furnishings Corporation (Nasdaq: HOFT): down 1.6%
- La-Z-Boy Incorporated (NYSE: LZB): up 1.6%
- RH (NYSE: RH): down 0.7%
- Wayfair Inc. (NYSE: W): up 0.2%
- Williams-Sonoma, Inc. (NYSE: WSM): down 1.6%
One reason for the general steadiness of these stocks may be that investors have become almost desensitized to the near-weekly tariff announcements from the president. Additionally, in November, the Supreme Court is set to hear a challenge regarding the constitutionality of Trump’s levying tariffs against countries and industries—a power historically reserved for Congress.
If the Supreme Court rules against Trump, all of the tariffs he imposed—including the home furnishing ones this week—could be revoked.
