The first round of tariffs has already taken effect, but the impact on retailers hasn’t been universal. Depending on the vendor, showrooms have either experienced a price increase on certain brands or they haven’t — yet.
While the second round – the dreaded 25-percent hike – will not take place until January 1 (unless an accord is reached between China and the U.S. during the G20 Buenos Aires Summit on November 30), retailers are preparing for the worst.
It would seem logical that MSRPs and IMAPs will be raised across the board by manufacturers, affecting brick-and-mortar and online sellers alike; however, some retailers have expressed concern that the larger online distributors might opt to eat the costs, relying on volume to help make up the difference. In addition, the showroom owners and manufacturers I spoke with at High Point Market were worried that consumers might put off any planned furniture and lighting purchases until there is either A) a change in the tariff status, B) the current Administration’s term is over, C) interest rates improve, or D) there is an unforeseen uptick in purchasing power.
If the recent Recession is any indication, the high-end and luxury market will continue going strong without much fluctuation. Mass merchants with upgraded style at a lower price point – such as the Targets, IKEAs, and Home Goods of the world – will capture the lower end, and the middle (where many lighting showroom customers are) will take the brunt of the price impact.
At last month’s High Point Market, I met manufacturers who are actively scouting to relocate their manufacturing operations to countries not affected by the tariff (i.e. Taiwan, Indonesia, Philippines, Mexico) as well as retailers who are planning to specifically highlight product that is “tariff-free” in their stores.
This is an on-going story that we will continue to follow closely in the months ahead.