Trump’s Furniture Tariffs: Boom or Doom for Global Trade?

The global furniture industry stands on precarious grounds due to impending tariff increases. U.S. President Donald J. Trump, on a late-Friday address, declared an extensive scrutiny of furniture imports into the U.S. He predicted the final outcome of this investigation to be out within the next 50 days, after which imposed tariffs will be applied on the furniture being shipped from overseas. His aim is to revitalize the furniture industry in states such as North Carolina, South Carolina, Michigan, and many more across the country.

Interestingly though, Trump’s international trade policies have already led to the shutdown of two proud American brands that had roots in Michigan, a state that stands to benefit from his furniture tariff proposal. Howard Miller Company, including its subsidiary Hekman, announced its unfortunate closure in July. Originating in Michigan, both firms have deep-rooted history.

Owing to a slump in the housing market triggered by inflated interest rates, Howard Miller faced dwindling sales. Imposition of heightened tariffs further added to their woes, escalating the costs of raw materials and components, making it untenable to sustain operations efficiently.

Claudio Feltrin, the chairperson of FederlegnoArredo, an association representing the majority of Europe’s premium furniture manufacturing companies, expressed concerns over the increasingly uncertain future. The ambiguity around the tariff regime has kept everyone unnerved and uncertain, with Italy’s wooden furniture exports taking a hit of 6.6 percent in May alone.

Monday is expected to observe further dips in shares for major furniture companies. Last Friday’s after-hour trading reported a decline of nearly 7 percent for the shares of RH and Williams Sonoma, while Wayfair’s shares plummeted by 8 percent.

Top furniture exporters to the U.S., namely China and Vietnam, seem to be at risk as per the U.S. Commerce Department data. Confartigianato, an Italian advocacy group that represents artisans and small businesses, including in the furniture, decor, and fashion sectors, estimates Italian exports totaling 17.8 billion euros to be in jeopardy.

Small businesses form a significant part of Italy’s industrial core. The European Union and the U.S. brokered a trade deal in July that provided a short-term respite for the furniture industry, wherein the tariffs on most EU exported goods were fixed at 15 percent. Yet, Feltrin advocates the necessity of the EU to negotiate more favorable terms with South American countries to counterbalance the losses faced in the U.S. market.

For example, Brazil’s heavily guarded market, with an average customs duty of 13.5 percent, was cited by the European Commission as an opportunity for better trade agreements. Feltrin, in July, held meetings with Italy’s Deputy Prime Minister and Minister of Foreign Affairs, Antonio Tajani, to deliberate on the potential for a significant deal that would lift tariffs on goods exported to South America.

Since 1999, the EU, comprising 27 countries, and Mercosur, a trade bloc that includes countries like Brazil, Argentina, Paraguay, Uruguay, and Bolivia, have been engaging in talks aimed at reaching a trade agreement. Although the first draft was proposed in 2019, it hasn’t yet received endorsements from key EU nations such as France. The European Commission claims this arrangement will save EU companies four billion euros annually in export duties.

Finally, in December 2024, an agreement was reached with South American countries by the European Commission. However, it has not been put forward as it awaits confirmation from the member states and the European Parliament. The primary objective of this EU-Mercosur trade agreement is to enhance bilateral trade and investment, reduce trade barriers, and establish more reliable and robust rules in areas such as intellectual property rights, competition, and good regulatory practices, especially benefiting small and medium enterprises.

India also garners attention as it imposes mandatory certifications that potentially can obstruct Italian imports. Economists at Istat, Italy’s statistical bureau, projected in June that there would be a modest growth in Italy’s economy by 0.6 percent in 2025 and 0.8 percent in 2026, encouraged by an increasing domestic demand.

Confindustria, Italy’s largest industry confederation, advised geographical diversification to be much crucial in these challenging times. It suggested Italian exporters should target high-growth markets such as the South American trade bloc, which has contributed 7.5 billion euros to Italian exports, including other promising markets in India, Australia, and South East Asia. According to the confederation’s approximations, there could be an increase of plausible 13 billion euros in cumulative profits by 2027 from global sales, compensating for the losses incurred from U.S. exports.

Trump and his advocates anticipate a revival of domestic manufacturing and its supply chains, a sector that experienced a significant contraction since the 1970s and 1980s. During that era, numerous companies began to offshore their manufacturing activities which were furthermore facilitated by favorable trade agreements with China and the latter’s inclusion into the World Trade Organization.