Last week’s announcement of a reduction in tariff rates on Chinese imports is the latest in a rapidly shifting global tariff picture that is far from complete. With the temporary pause of “reciprocal tariffs” set to expire in early July, it seems reasonable, given recent history, to expect additional announcements in the coming weeks regarding changes in the tariff rates of other key trading partners.
For many in the furniture industry, the next trading partner to watch is Vietnam, whose initial 46% reciprocal tariff rate seems likely to change in the wake of the recent announcement on China. Given the administration’s apparent preference for bi-lateral trade deals, it’s likely the final rate for Vietnam and other key furniture sources may not be known for some time and may be changed multiple times until the process is resolved.
What that means for furniture manufacturers is more short-term uncertainty. In fact, there appears to be only one constant in the global sourcing situation, and that is change: frequent, unpredictable change.
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In such an environment, it becomes increasingly important for companies to focus on those things they can control, to ensure that the basic blocking and tackling that occurs around the product acquisition process functions smoothly and supports the need for increased flexibility.
It is not unlike an athlete whose ability to change direction quickly and adapt rapidly to the changing actions of competitors flows from a solid, balanced position. Overcompensating in any one direction only serves to prevent adjustment in a complementary or even completely different direction should conditions “on the field” change.
While tariffs currently dominate many discussions, and not wrongly so, there remain myriad other factors currently impacting the furniture business: from consumer spending that is erratic at best and structurally hampered by everything from stubbornly high interest rates and inflation to a housing market that remains challenged, to put it kindly.
Many of the structural challenges confronting the furniture industry before the current tariff tussle broke out remain, and many of them will likely remain once the major tariff questions have been resolved. Unless and until consumers are once again buying and selling homes at something approaching historic levels, until interest rates can facilitate big ticket purchases and real incomes begin rising across a broad swath of the consumer base, the industry will remain challenged.
That is why it is critical for companies to focus on building a strong foundation for their business, to ensure that waste is eliminated where possible, that best practices are being executed across all parts of individual organizations and that the ability to adapt quickly becomes a primary focus of organizational activity.
If the past decade has taught us anything, it is that change is accelerating; it is not predictable and often not subject to traditional remedies. Now is the time for the industry to take its cues from the best and brightest athletes across all sports.
Build your base, your foundation. Ensure your ability to move quickly and in a balanced fashion in whatever direction competition requires.