As U.S.-based furniture businesses continue to deal with the evolving tariff landscape, it’s crucial to focus on strategies that will help mitigate the impact of rising import costs, labor shortages, and supply chain disruptions.
Summary:
Shift to domestic sourcing: Reduce reliance on overseas suppliers to avoid tariffs and improve lead times.
Embrace lean manufacturing and tech: Optimize inventory and operations using automation, predictive analytics, and 3D visualization.
Stay informed on tariffs: Monitor updates and exemptions to capitalize on favorable trade policies.
While global tariffs affect international supply chains, there are several U.S.-focused considerations and strategies that can help businesses not only survive but thrive.
With tariffs continuing to disrupt global supply chains, many U.S. furniture companies are looking to bring production back home. The increased tariffs on imports from China and Vietnam have made overseas manufacturing less cost-competitive, and businesses are rethinking their reliance on international suppliers.
Explore domestic suppliers: Identify and connect with U.S.-based manufacturers and suppliers. The U.S. government offers incentives and subsidies for certain domestic manufacturing activities, and the potential to avoid tariffs can make local sourcing more appealing.
Increase investment in U.S. production: Consider expanding or modernizing existing manufacturing facilities to accommodate increased demand for domestically sourced materials. The American Jobs Plan (2021) and potential future legislation may provide additional incentives for local production in some industries.
Reduce lead times: Shifting production domestically can help reduce lead times, making U.S. furniture companies more competitive when it comes to speed and flexibility. This can be a significant advantage when customer demands shift rapidly, or when delays in global shipping continue to be an issue.
Given the unpredictable costs of imports, U.S. furniture businesses should embrace lean manufacturing principles to help control costs, reduce waste, and improve efficiency. Lean practices can help companies be more adaptable and better positioned to respond to market fluctuations.
Inventory management optimization: Use predictive analytics and demand forecasting tools to better align inventory with customer demand, reducing overstock or understock situations. This can be especially critical when supply chain disruptions and tariffs make it difficult to predict lead times.
Automate and streamline operations: Invest in automation technologies in production and inventory management to reduce labor costs and improve efficiency. Automation can also help with quality control and product consistency, further reducing the risks associated with sourcing and supply chain disruptions.
U.S. furniture companies should look for ways to utilize digital tools and innovations to mitigate the challenges created by tariffs and supply chain disruptions. Technology solutions such as 3D product visualization, augmented reality (AR), and artificial intelligence (AI) can not only streamline internal operations but also enhance the customer experience, making businesses more resilient in uncertain times.
Implement 3D visualization: With tariffs increasing the cost of physical samples and product photography, 3D product visualization can allow businesses to showcase their furniture designs digitally, reducing costs and improving time to market. Additionally, AR-enabled experiences allow customers to visualize how furniture will look in their homes before making a purchase, increasing conversion rates.
Use AI for supply chain optimization: AI and machine learning can help businesses predict demand more accurately, optimize procurement, and manage inventory more efficiently. This can be particularly valuable when navigating the unpredictability of tariffs and global supply chain disruptions.
Enhance online shopping and customization: As more U.S. consumers move toward online shopping, offering customizable options through digital tools can increase consumer engagement and satisfaction. A seamless online experience can help businesses differentiate themselves from competitors who rely on traditional sales models.
The U.S. government frequently revises tariff policies and trade agreements. It’s important for furniture businesses to stay informed about these changes to take advantage of any exemptions or new trade agreements that may lower costs.
Stay updated on tariff exemptions: Periodically, specific furniture products or materials may be exempted from tariffs. Regularly check the U.S. Trade Representative (USTR) updates and engage with trade consultants to ensure you are aware of any applicable tariff relief for your business.
Take advantage of trade agreements: The USMCA (United States-Mexico-Canada Agreement) continues to provide preferential tariff treatment for goods sourced from these regions. Furniture companies that have partners in Mexico or Canada should continue to capitalize on these exemptions, but also stay aware of any changes that may affect these agreements.
The uncertainty surrounding tariffs can make it difficult to maintain stable pricing. U.S. furniture companies need to ensure their pricing strategies are flexible enough to adjust as tariffs evolve while maintaining profitability.
Dynamic pricing models: Implement flexible pricing strategies that allow for adjustments based on raw material costs, tariff changes, and other economic factors. Transparent pricing models will help consumers understand the reasons behind price increases.
Value engineering: Work with suppliers and designers to find ways to reduce costs by modifying designs or using alternative materials that may be subject to lower tariffs. This approach can help offset some of the increases in import costs while maintaining product quality.
The DTC model has grown significantly in recent years, and it offers U.S. furniture companies the opportunity to bypass the traditional retail supply chain. With tariffs increasing the cost of goods, selling directly to consumers can offer higher margins and more control over pricing and distribution.
Build strong e-commerce platforms: Focus on strengthening your direct-to-consumer online presence. Invest in user-friendly websites and platforms that allow customers to easily purchase and customize furniture online.
Offer subscription or membership models: As furniture companies adapt to market changes, offering subscription-based models (e.g., furniture leasing or replacement services) may provide a steady revenue stream and reduce the risk of inventory volatility caused by tariff increases.
For U.S. furniture companies, navigating the evolving tariff landscape requires proactive strategies focused on efficiency, technology, and flexibility. By embracing domestic sourcing, optimizing supply chains, leveraging technology for customer engagement, and staying informed about changing tariffs, U.S. businesses can not only mitigate the risks posed by these tariffs but also position themselves for long-term success in a highly competitive market.
At Cylindo, we’re proud to partner with some of the most forward-thinking furniture brands in the industry, helping them not just survive in an uncertain market, but thrive. Curious to find out more? Let’s talk.