Shares of RH (RH +0.87%) fell on Monday, declining as much as 10% before recovering to a 5% loss as of 1:07 p.m. ET.
Furniture makers got a big boost on Friday, after Federal Reserve Chair Jay Powell's speech hinted at interest rate cuts in the months ahead.
However, the good times didn't last, as President Donald Trump took to his social media platform, Truth Social, this morning to state that furniture-specific tariffs would be forthcoming.
NYSE: RH
Key Data Points
Fifty days until more furniture tariffs?
A lot of furniture makers like RH had traditionally built their goods in China, but during the first Trump administration, many began to diversify their supply chains to other Southeast Asian countries like Vietnam. After the most recent bout of tariff negotiations, China tariffs are currently around 55%, while the tariff on Vietnam is 20%.
Still, that doesn't appear to be good enough for Trump, who wrote on Truth Social this morning:
I am pleased to announce that we are doing a major Tariff Investigation on Furniture coming into the United States. Within the next 50 days, that Investigation will be completed, and Furniture coming from other Countries into the United States will be Tariffed at a Rate yet to be determined. This will bring the Furniture Business back to North Carolina, South Carolina, Michigan, and States all across the Union. Thank you for your attention to this matter!
It was unclear if the furniture tariffs would be in addition to country-specific tariffs, or if furniture would carry a special tariff outside of the country tariffs. It appears furniture makers will find out in 50 days or so.
If the tariffs are onerous, it could be a problem for RH, which only sourced 10% of its furniture from within the United States in 2024, in terms of dollar volume. The other 90% was split among Vietnam, China, Europe, Indonesia, and India, in that order of importance.
Image source: Getty Images.
RH had been on its way to a recovery
RH's revenue had turned up in its recent quarter, up 12% from the prior year. However, RH is lapping extremely depressed results from last year, which portrayed what CEO Gary Friedman called "the worst housing market in almost 50 years."
New tariffs certainly won't help the recovery, but could they derail it? RH is a premium manufacturer, so it may be able to raise prices, especially if lower interest rates lead to a housing rebound. However, if demand isn't there, the last couple of years have shown that even RH isn't immune from cutting prices and squeezing margins.
