RH (NYSE: RH), the luxury home furnishings retailer, has experienced a significant downturn in its stock performance, largely attributable to renewed threats of furniture tariffs from former President Donald Trump. This decline, most notably a 7% plummet in after-hours trading on September 11, 2025, followed the company's weak second-quarter earnings report, where tariffs were explicitly cited as a contributing factor to lower-than-expected results and a trimmed sales outlook. The event underscores the profound sensitivity of the furniture market to protectionist trade policies, creating immediate ripples of uncertainty and prompting strategic re-evaluations across the industry.
The tariff threats, announced in August 2025, have cast a long shadow over a sector already grappling with complex global supply chains and evolving consumer demands. For RH, a company heavily reliant on international sourcing, these developments pose a formidable challenge to its operational efficiency and profitability, signaling a turbulent period ahead for both the company and the broader home furnishings landscape.
Detailed Coverage: Trump's Tariff Gambit and Market Tremors
The catalyst for RH's recent struggles originated on August 22, 2025, when former President Donald Trump took to his Truth Social platform to announce his intention to launch a "major Tariff Investigation on Furniture coming into the United States." He declared that this investigation would conclude "within the next 50 days," after which tariffs would be imposed at an unspecified rate. Trump's stated objective was clear: to repatriate furniture manufacturing to the U.S., specifically mentioning states like North Carolina, South Carolina, and Michigan, historically significant hubs for American furniture production. The White House later confirmed the inquiry would be conducted under Section 232 of the national security statute.
This announcement was particularly impactful given the existing duties on furniture imports, especially from China. Prior to this new threat, Chinese furniture was already subject to a 25% Section 301 tariff from Trump's previous term, a 20% "fentanyl" tariff, and a temporary 10% "reciprocal" tariff. The suspension of the "de minimis" duty exemption in May 2025, which previously allowed tariff-free imports under $800, further tightened the screws on low-value Chinese imports.
China and Vietnam collectively accounted for approximately 60% of U.S. furniture imports in 2024, highlighting the industry's deep reliance on these regions.
The market's reaction was swift and decisive. In the four trading sessions leading up to RH's Q2 earnings report on September 11, its stock had already declined by 9%, reflecting mounting investor anxiety. The subsequent 7% after-hours drop on September 11 was a direct consequence of the earnings report, where the company explicitly acknowledged the adverse impact of tariffs. Other import-reliant furniture retailers also felt the heat, with shares of Wayfair (NYSE: W), Williams-Sonoma (NYSE: WSM), and Arhaus (NASDAQ: ARHS) dropping between 5% and 8% in premarket and after-hours trading. Conversely, domestic manufacturers like Bassett Furniture (NASDAQ: BSET), La-Z-Boy (NYSE: LZB), Ethan Allen Interiors (NYSE: ETD), and Steelcase (NYSE: SCS) saw their shares remain positive or even gain, with La-Z-Boy's stock rising 8% following the news. Industry groups, such as the American Home Furnishings Alliance, vehemently opposed the tariffs, arguing against any national security justification and warning of increased costs for consumers and harm to domestic producers.
Corporate Crossroads: Winners, Losers, and RH's Dilemma
The specter of new tariffs creates a clear delineation of potential winners and losers within the furniture market, with RH (NYSE: RH) finding itself squarely in the crosshairs of the latter. As a luxury retailer sourcing approximately 90% of its furniture internationally—from countries including Vietnam, China, Europe, Indonesia, and India—RH is particularly vulnerable to increased import costs. The company has already trimmed its full-year revenue growth expectation to 9-11% from a prior 10-13% and reduced its adjusted EBITDA margin outlook, explicitly citing a 90-basis-point impact from tariffs.
Beyond financial projections, RH has also been forced to delay key strategic initiatives. The launch of a new brand extension was pushed from 2025 to Spring 2026, and its fall collection sourcebook distribution was delayed by eight weeks, underscoring the operational disruptions caused by tariff uncertainty. RH CEO Gary Friedman has been vocal about his concerns, warning of "big furniture inflation" and the potential for "50% of the industry to be wiped out." While Friedman acknowledges the difficulty and investment required to establish large-scale domestic production for wood and metal furniture, RH has proactively responded by working to shift production out of China, aggressively addressing a 50% duty on imports from India (7% of its business), and increasing operations at its North Carolina manufacturing plant.
Other import-reliant retailers are similarly exposed. Wayfair (NYSE: W), a prominent online furniture retailer, could see price increases of up to 32% to offset tariff costs, potentially depressing sales and profits. Arhaus (NASDAQ: ARHS) and Williams-Sonoma (NYSE: WSM), with their global supply chains, have also seen their stocks dip. Even Etsy (NASDAQ: ETSY), though less directly exposed, could face indirect impacts from a broader economic slowdown or reduced discretionary spending.
Conversely, domestic manufacturers with strong U.S. production bases stand to benefit. Ethan Allen Interiors (NYSE: ETD) and La-Z-Boy (NYSE: LZB) both saw their shares rise, reflecting investor confidence in their ability to bypass import duties and cater to increased demand for "American-made" products. While tariffs aim to stimulate domestic production, U.S. manufacturers still face challenges, including increased input costs for raw materials and ongoing labor shortages, meaning a complete shift to domestic production remains a significant hurdle.
Wider Significance: Reshaping Global Supply Chains and Consumer Behavior
Trump's furniture tariff threats are not isolated incidents but rather a continuation of a broader "America First" trade agenda that has significantly reshaped global supply chains and consumer behavior. This renewed push for protectionism accelerates existing industry trends, particularly the drive towards supply chain diversification and, to a lesser extent, reshoring. Before the tariffs, the U.S. furniture industry was heavily dependent on China, but the initial rounds of duties forced a strategic pivot, with companies seeking to spread risk across multiple sourcing countries. Vietnam, Mexico, Malaysia, and Indonesia have emerged as key beneficiaries of this diversification, seeing increased furniture exports to the U.S.
The ripple effects extend beyond direct competitors. Supply chain disruptions, increased logistics costs, and longer lead times have become common challenges. For consumers, the most tangible impact has been higher prices for furniture and bedding. The National Retail Federation estimates that consumers could spend billions more annually on furniture due to tariffs, leading to shifts in purchasing habits, including "doom spending" (buying due to fear of future price hikes) and a growing preference for "American-made" products.
From a regulatory and policy standpoint, the repeated use of Section 232 of the Trade Expansion Act of 1962, which permits tariffs based on national security concerns, has become a defining characteristic of this trade approach. This broad application extends beyond furniture to other sectors like steel and aluminum, highlighting a consistent policy trend. The legality of these broader tariff policies continues to face challenges, with the U.S. Supreme Court preparing to hear relevant cases, underscoring the ongoing regulatory uncertainty.
Historically, comparisons are often drawn to the Smoot-Hawley Tariff Act of 1930, which imposed high tariffs on nearly 2,000 categories of imports and is widely considered to have exacerbated the Great Depression through retaliatory measures and a sharp decline in global trade. While the contemporary context differs, the underlying principle of using tariffs to protect domestic industries and reduce trade deficits echoes past trade wars, often demonstrating that such measures can lead to higher consumer prices, retaliatory actions, and broader economic disruptions. The long-term significance lies in a permanently altered landscape where supply chain flexibility, agility, and risk mitigation have become paramount.
What Comes Next: Navigating Uncertainty and Strategic Evolution
The furniture industry and RH (NYSE: RH) are at a critical juncture, facing a future defined by heightened uncertainty and the imperative for strategic adaptation. In the short term, the looming October 2025 deadline for the tariff investigation means continued market volatility and the likelihood of further price increases for consumers, potentially ranging from $8.5 billion to $13.1 billion annually according to the National Retail Federation. Import-reliant retailers will grapple with squeezed profit margins, while domestic manufacturers may see a temporary boost. RH's existing challenges, including delayed initiatives and a trimmed outlook, are likely to persist, pushing the company to accelerate its existing efforts to diversify sourcing and increase domestic production.
In the long term, the industry is poised for a fundamental reshaping. Strategic pivots will be essential. Reshoring and nearshoring efforts, while capital-intensive and time-consuming, will gain traction as companies seek to reduce tariff exposure and enhance supply chain control. Automation will be a crucial enabler for sustainable domestic manufacturing, helping to offset higher labor costs and improve efficiency. Companies like Ashley Furniture and La-Z-Boy, with their significant U.S. production, are well-positioned to capitalize on this trend. RH, despite its international sourcing, has already begun increasing operations at its North Carolina factory and actively shifting production from China, indicating a recognition of this strategic imperative.
Market opportunities will emerge for agile domestic producers and companies that can innovate in automation and supply chain resilience. Conversely, challenges will include persistent inflationary pressures, potential consumer demand dampening (especially in a housing market described by RH's CEO as the "worst in almost 50 years"), and increased competitive disadvantage for smaller, less adaptable import-dependent businesses. This could lead to industry consolidation, potentially benefiting larger, more resilient players like RH, which possess the capital and bargaining power to weather the storm and acquire struggling competitors.
Analyst predictions offer a mixed but cautious outlook. While some firms have downgraded RH's stock due to tariff-related profitability concerns and high import exposure, others maintain a positive view, citing RH's strategic liquidity management, product transformation, and its ability to leverage its luxury positioning and affluent customer base to navigate tariffs. Experts widely agree that while tariffs might accelerate reshoring, sustainable success in manufacturing will hinge more on automation and long-term strategic investments rather than temporary policy shifts. The coming months will reveal which companies can effectively pivot and thrive in this evolving trade landscape.
Wrap-up: A New Era for Furniture and Investment Vigilance
The recent turbulence surrounding RH (NYSE: RH) and the broader furniture market, ignited by former President Trump's tariff threats, marks a pivotal moment for the industry. The key takeaways are clear: the era of highly centralized, low-cost global supply chains is giving way to a more diversified, resilient, and potentially localized model. While the immediate impact is a painful squeeze on import-reliant retailers and inflationary pressures for consumers, the long-term significance lies in accelerating fundamental shifts towards domestic manufacturing, automation, and strategic supply chain re-engineering.
Moving forward, the market will remain sensitive to trade policy announcements and geopolitical developments. Companies that successfully adapt by investing in automation, diversifying their sourcing beyond traditional hubs, and strategically adjusting their product mix and pricing will be best positioned to thrive. For RH, its ability to leverage its brand strength and affluent customer base to absorb or pass on increased costs, coupled with its ongoing efforts to diversify production, will be critical to its resilience.
Investors should closely watch for several indicators in the coming months: the final details and implementation timeline of any new tariffs, the quarterly earnings reports of key players (both importers and domestic manufacturers) for insights into margin pressures and strategic responses, and broader economic data related to consumer spending and the housing market. The furniture industry is entering a new era where agility, strategic foresight, and a robust, diversified operational framework will be paramount for sustained success.
This content is intended for informational purposes only and is not financial advice
